Asked by Reuben Acosta on Apr 24, 2024
Economic cost can best be defined as
A) any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers.
B) any contractual obligation to labor or material suppliers.
C) a payment that must be made to obtain and retain the services of a resource.
D) all costs exclusive of payments to fixed factors of production.
Economic Cost
A payment that must be made to obtain and retain the services of a resource; the income a firm must provide to a resource supplier to attract the resource away from an alternative use; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product.
- Unravel the distinctions between explicit and implicit costs, alongside the divergence between economic and accounting profits.
Learning Objectives
- Unravel the distinctions between explicit and implicit costs, alongside the divergence between economic and accounting profits.