Which of the following is NOT an implicit cost?
A) Forgone lease payments from a building owned and used by the firm.
B) Forgone wages the owner could have earned working for someone else.
C) Forgone equipment the owner was not willing to purchase at the asking price.
D) Forgone interest on funds the owner used in the business rather than investing.

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources that a firm already owns. Choice C, "Forgone equipment the owner was not willing to purchase at the asking price," does not represent an opportunity cost of using existing resources but rather a decision not to engage in a transaction. Choices A, B, and D all represent opportunity costs of resources the firm already owns or decisions made by the owner that have an opportunity cost, such as using a building, not working elsewhere, or using funds in the business rather than investing them.

Which of the Following Is NOT an Implicit Cost