A firm's opportunity costs of using resources provided by the firm's owners are called
A)sunk costs
B)fixed costs
C)explicit costs
D)implicit costs
E)entrepreneurial costs

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources provided by the firm's owners. These costs are not recorded in the accounting statements because they do not involve a cash outflow. Examples of implicit costs include the foregone income that the owners could have earned in alternative employment or investment opportunities. Sunk costs are costs that have already been incurred and cannot be recovered, fixed costs are costs that do not vary with the level of output, explicit costs are costs that involve a cash outflow, and entrepreneurial costs are costs associated with the functions performed by an entrepreneur, such as risk-taking and innovation.

A Firm's Opportunity Costs of Using Resources Provided by the Firm's