Question

Which of the following statements is correct?

a.Opportunity costs equal explicit minus implicit costs.
b.Economists consider opportunity costs to be included in a firm’s total revenues.
c.Economists consider opportunity costs to be included in a firm’s costs of production.
d.All of the above are correct.

Answer 1

Answer: Option C

Explanation: The cost can be differentiated on the basis of subject matters as accounting cost and economic cost.

The accounting cost do not consider the opportunity cost while calculating the total cost but the economic cost does. As per the economics, total cost is the sum of explicit cost and implicit/ opportunity cost.

Explicit cost refers to the direct payment made to others while the implicit cost refers to the loss of choosing one alternative over other.

Hence from the above we can conclude that the correct option is C .