Final answer:
Avoidable costs, also known as discretionary costs, are those that can be cut based on certain choices, contrasting with explicit and implicit costs where explicit costs are actual payments for resources while implicit costs are the opportunity costs of utilizing owned resources.
Step-by-step explanation:
Costs that can be eliminated by making specific choices are referred to as avoidable costs or discretionary costs. These include costs that are not essential for the operation of a business and can be cut if needed. In contrast, we can distinguish between two types of cost that a business typically considers: explicit costs and implicit costs.
Explicit costs are out-of-pocket, actual payments, such as wages paid to employees or rent for office space. Implicit costs, however, represent the opportunity cost of using resources that the firm owns which could have been utilized in another manner, commonly representing assets given up or not realized by the firm, such as using the ground floor of a home as a retail store without paying formal rent.