Question

____________costs are the explicit payment a firm must make, or the incomes it must provide, to attract the resource it needs away from alternative production opportunities.

Answer 1

In economics, explicit costs are out-of-pocket costs, while implicit costs represent opportunity costs of using resources already owned by the firm.

Step-by-step explanation:

In economics, the explicit costs are the out-of-pocket costs that a firm must pay for its production, such as wages paid to employees or rent for office space. These costs are the actual payments made by the firm. On the other hand, implicit costs represent the opportunity cost of using resources already owned by the firm. These costs can include the owner's time and labor that could have been used in alternative production opportunities.

For example, if a business owner works in their own business without earning a formal salary, that would be considered an implicit cost. Additionally, if a home is used as a retail store, the rent that could have been earned from leasing that space to someone else is another implicit cost.

Implicit costs also include the depreciation of goods, materials, and equipment that are necessary for a company to operate. They are important to consider because they reflect the full cost of using resources, even if no cash payment is involved.