Implicit costs are measured by

Question

Quizplus · Accepted Answer

Implicit costs refer to the opportunity cost of using a resource for a given activity instead of its next best alternative use. Therefore, measuring implicit costs requires considering the value of the next-best alternative uses of inputs. Option A is the only choice that reflects this definition of implicit costs. Option B is incorrect because actual expenses paid by a firm are explicit costs. Option C is incorrect because it refers to accounting profit, which includes both explicit and implicit costs. Option D is incorrect because it is too broad and doesn't capture the idea of opportunity cost.

Implicit Costs Are Measured by