Question

the implicit cost of financial capital is: question 34 options: a) the opportunity cost of the capital used by a business such as earning interests from saving that money in a bank. b) the expense associated with buying machines. c) irrelevant for determining economic profit. d) the expense associated with leasing machines.

Answer 1

The implicit cost of financial capital refers to the opportunity cost of the capital a business uses, such as potential earnings from alternative investments like a bank savings account.

Step-by-step explanation:

The implicit cost of financial capital is best defined as the opportunity cost of the capital used by a business. This can include not earning interest from saving that money in a bank, which correlates with option a). It's not just about the money that isn't earned, but also other resources that a company or individual might forgo using. Examples of implicit costs are the personal time an owner invests without receiving a formal salary or utilizing part of a home for business purposes. These costs are not actual cash outlays but they do represent potential income or services that are sacrificed as a result of engaging in the business activity.