Question

An implicit cost is defined as:

O the amount by which the money spent on an input to production exceeds its opportunity cost.
O the amount by which economic profit exceeds accounting profit.
O the difference between an input's explicit cost and its actual cost.
O the opportunity cost of using a resource that is not explicitly paid out by the firm.

Answer 1

Correct option: The opportunity cost of using a resource that is not explicitly paid out by the firm.

Step-by-step explanation:

Implicit costs is defined as the opportunity cost of choosing some alternative over other alternative. In other words, it is the amount of money or satisfaction level that is foregone to choose some other alternative.

Economic cost is the sum of implicit costs and the explicit costs.

Economic cost = Implicit cost + Explicit cost