Pete owns a shoe-shine business. Which of the following costs would be implicit costs?
(i)shoe polish
(ii)rent on the shoe stand
(iii)wages Pete could earn delivering newspapers
(iv)interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
A)(i) and (ii) only
B)(iv) only
C)(iii) and (iv) only
D)(i), (ii), (iii), and (iv)

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources owned by the business for which no actual payment is made. In this case, the wages Pete could earn delivering newspapers and the interest his money was earning before being used for the business are implicit costs.

Pete Owns a Shoe-Shine Business