Question

Accounting costs will be __________ than economic costs as long

as implicit costs are nonzero







1)

not enough information to tell







2)

no different







3)

greater







4)

less

Answer 1

3) Greater

Step-by-step explanation:

In economics, accounting costs and economic costs are two different concepts. Accounting costs refer to the actual out-of-pocket expenses incurred by a firm, such as wages, rent, and materials. These costs are easy to measure and are recorded in the firm's accounting records. On the other hand, economic costs take into account both explicit and implicit costs, which are the opportunity costs of using resources in one way instead of another. Implicit costs are the opportunity costs of using resources that the firm already owns, such as the opportunity cost of using the owner's time and capital. These costs are not recorded in the firm's accounting records and are often more difficult to measure.

In economics, accounting costs and economic costs are two different concepts. Accounting costs refer to the actual out-of-pocket expenses incurred by a firm, such as wages, rent, and materials. These costs are easy to measure and are recorded in the firm's accounting records. On the other hand, economic costs take into account both explicit and implicit costs, which are the opportunity costs of using resources in one way instead of another. Implicit costs are the opportunity costs of using resources that the firm already owns, such as the opportunity cost of using the owner's time and capital. These costs are not recorded in the firm's accounting records and are often more difficult to measure. If implicit costs are nonzero, then economic costs will be greater than accounting costs. This is because implicit costs represent the opportunity cost of using resources that the firm already owns, which is a cost that is not reflected in the accounting records. For example, if a firm uses the owner's time to manage the business, the implicit cost of that time is the opportunity cost of not using that time for another purpose, such as leisure or another business opportunity. If the firm only considers the explicit costs of running the business, such as wages and rent, then it is not taking into account the opportunity cost of the owner's time, and the economic costs will be greater than the accounting costs.