Asked by katherine alvarez on Jul 21, 2024
Verified
To the economist, total cost includes
A) explicit and implicit costs.
B) neither implicit nor explicit costs.
C) implicit, but not explicit, costs.
D) explicit, but not implicit, costs.
Explicit Costs
Direct, out-of-pocket payments for resources or services used in the production of goods or services.
Implicit Costs
Denotes the opportunity costs of utilizing resources owned by the firm for its operations, instead of allocating them elsewhere to earn a return.
Total Cost
The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.
- Evaluate the approaches companies undertake to figure out total costs and the consequences of differing expenses on corporate financial performance.
Verified Answer
ER
Erika ReamesJul 24, 2024
Final Answer :
A
Explanation :
Total cost in economics includes both explicit and implicit costs. Explicit costs are direct, out-of-pocket payments, while implicit costs represent the opportunity costs of using resources owned by the firm for its current purposes rather than the next-best alternative use.
Learning Objectives
- Evaluate the approaches companies undertake to figure out total costs and the consequences of differing expenses on corporate financial performance.