Which of the following is an implicit cost?
A)salaries paid to owners who work for their own firm
B)interest on money borrowed to finance equipment purchases
C)cash payments for raw materials
D)wages paid to hourly employees
E)foregone interest on money taken from bank accounts to buy equipment

Question

Quizplus · Accepted Answer

Implicit costs are opportunity costs associated with the use of resources that belong to the firm itself, such as the foregone interest on money taken from bank accounts to buy equipment. Salaries paid to owners who work for their own firm are explicit costs. Interest on money borrowed to finance equipment purchases is also an explicit cost. Cash payments for raw materials and wages paid to hourly employees are regular expenses and not opportunity costs.

Which of the Following Is an Implicit Cost