An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Question

Quizplus · Accepted Answer

The wages that she could earn if she worked as a graphic artist for an advertising agency represent an opportunity cost, not an explicit cost. Explicit costs are direct payments made to others in the course of running a business, such as rent, utilities, and employee wages.

An Example of an Explicit Cost for the Owner of a Tattoo