Asked by Devante Starks on May 13, 2024
Verified
Suppose you own your own pizzeria.All of the following are implicit costs except
A) the income you could have made using your delivery truck to do something else.
B) the gasoline used when you deliver pizzas.
C) the wages you could earn making pizza for your competitors.
D) the interest forgone on the money you invested in your restaurant.
Implicit Costs
The opportunity costs of using resources owned by the business for its operations, not directly paid out in cash.
Delivery Truck
A vehicle specifically designed for transporting goods from one location to another.
Income
The amount of money received over a period of time either as payment for work, goods, or services, or through investments.
- Differentiate between explicit and implicit costs and their role in determining economic profit.
Verified Answer
FA
Fabiola ArguihoMay 17, 2024
Final Answer :
B
Explanation :
Implicit costs are those that represent opportunity costs, not direct outlays of cash. Choices A, C, and D are all examples of opportunity costs (income or interest you forego by choosing to invest your resources in your own pizzeria). Choice B, the gasoline used when you deliver pizzas, is an explicit cost because it represents a direct payment for goods used in the business.
Learning Objectives
- Differentiate between explicit and implicit costs and their role in determining economic profit.