Which of the following is an example of an explicit cost of production?
A) the forgone rent that could have been earned if land owned by a firm was not used as its parking lot
B) the cost of the flour for the baker and the forgone labour earnings for an entrepreneur
C) the cost of forgone labour earnings for an entrepreneur
D) the cost of flour for a baker

Question

Quizplus · Accepted Answer

The cost of flour for a baker is a direct cost incurred for production and is therefore an explicit cost. The other options are examples of opportunity costs, which are implicit costs.

Which of the Following Is an Example of an Explicit