An example of an implicit cost is:
A)interest paid on a bank loan used to purchase equipment.
B)wages paid to a family member who works at the firm.
C)the value of a spare bedroom turned into a home office.
D)operating costs of a company-owned car.

Question

Quizplus · Accepted Answer

The value of a spare bedroom turned into a home office is an example of implicit cost because it represents the value of the next best alternative forgone, which is the opportunity cost of using the spare bedroom for other purposes (such as renting it out or using it for personal leisure). Implicit costs are not directly visible in accounting records but still affect a firm's decision-making and profitability. The other options are explicit costs, which are obvious and direct expenses incurred by a firm, such as interest payments or wages paid to employees.

An Example of an Implicit Cost Is