Frank owns a dog-grooming business. Which of the following costs would be implicit costs?
(i)dog shampoo
(ii)rent on the storefront
(iii)wages Frank could earn as a substitute elementary-school teacher
(iv)interest that Frank's money was earning before he spent his savings to set up the dog-grooming 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 Frank could earn as a teacher and the interest his savings were earning are implicit costs.

Frank Owns a Dog-Grooming Business