Money that must be paid for the use of factors of production such as labour and capital is an:

Question

Quizplus · Accepted Answer

Explicit cost refers to the monetary expenses incurred by a firm in acquiring or using the factors of production. Payments for labor and capital are explicitly stated and accounted for in the firm's financial records. Implicit cost, on the other hand, refers to the opportunity cost of using resources owned by the firm, such as the foregone alternative uses of the owner's time and funds. Accounting profit only takes explicit costs into account while economic profit takes both explicit and implicit costs into consideration.

Money That Must Be Paid for the Use of Factors