Implicit cost is a
A)cost that is incurred when a monetary payment is made.
B)cost incurred in the past that cannot be changed by current decisions and therefore cannot be recovered.
C)cost that represents the value of resources used in production for which no monetary payment is made.
D)sunk cost.

Question

Quizplus · Accepted Answer

Implicit cost is a cost that represents the value of resources used in production for which no monetary payment is made. It is the opportunity cost of using resources for one purpose instead of the next best alternative purpose. Option A is incorrect as a cost that is incurred when a monetary payment is made is called explicit cost. Option B is incorrect as sunk cost refers to the cost that has already been incurred and cannot be recovered in the future.

Implicit Cost Is a