Question

Which of the following would be an example of an implicit cost?

(i)
forgone investment opportunities
(ii)
wages of workers
(iii)
raw materials costs
Group of answer choices

Answer 1

(i) forgone investment opportunities

Step-by-step explanation:

Implicit costs are the same as the opportunity costs of using a company's resources. There are the foregone benefits of not investing in project B but opting for project A. Implicit costs are associated with the resources that a business already owns.

Implicit costs are used to calculate the economic value of a project. They help managers assess how best to use the available resources. Wages of workers and raw materials costs represent explicit costs, which are direct materials of a project.