Implicit costs
A)do not require an outlay of money by the firm.
B)do not enter into the economist's measurement of a firm's profit.
C)are also known as variable costs.
D)are not part of an economist's measurement of opportunity cost.

Question

Quizplus · Accepted Answer

Implicit costs represent opportunity costs, such as the value of the owner's time or the use of a resource, that do not require an actual monetary transaction or outlay of money by the firm. Therefore, they do not enter into the economist's measurement of a firm's profit. Option B is incorrect because implicit costs are, in fact, included in the economist's measurement of a firm's profit as part of its opportunity cost. Option C is incorrect because implicit costs are not the same as variable costs, which are costs that do vary with changes in output levels. Finally, option D is incorrect because implicit costs are, by definition, part of an economist's measurement of opportunity cost.

Implicit Costs