Which of the following statements is correct?
A)Opportunity costs equal explicit minus implicit costs.
B)Economists consider opportunity costs to be included in a firm's total revenues.
C)Economists consider opportunity costs to be included in a firm's costs of production.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Opportunity costs refer to the cost of giving up the best alternative in order to choose a certain option. Economists consider opportunity costs to be included in a firm's costs of production because it represents the value of the resources used in production that could have been used elsewhere. Therefore, option C is the correct statement. Option A is incorrect because opportunity costs are not equal to explicit minus implicit costs, but rather they are an additional cost that is not always accounted for in the explicit cost of production. Option B is incorrect because opportunity costs are not included in a firm's total revenues, but rather they represent the foregone opportunities that could have resulted in additional revenues.

Which of the Following Statements Is Correct