Final answer:
Depreciation is the correct term for the annual cost of wear of any asset expected to be in use for more than a year, and it is an implicit cost.
Step-by-step explanation:
The annual cost of wear of any asset that is expected to be in use for more than a year is known as depreciation. This term falls under the category of implicit costs, which also include other opportunity costs of using resources that the firm already owns. The other options provided, such as explicit cost, diminishing returns, marginal cost, and sunk cost, do not accurately describe the cost of wear of an asset over time. Depreciation is used to allocate the cost of a tangible asset over its useful life and is a non-cash expense that is reported on the income statement.