Implicit and explicit costs are different in that:
A)explicit costs are relevant only in the short run
B)implicit costs are relevant only in the short run
C)explicit costs are relevant only in the long run
D)explicit costs refer to the nonexpenditure costs and implicit costs to out-of-pocket costs
E)implicit costs refer to nonexpenditure costs and explicit costs to out-of-pocket costs

Question

Quizplus · Accepted Answer

Explicit costs refer to the out-of-pocket expenses incurred by a firm, while implicit costs are the opportunity costs of using resources the firm already owns. Implicit costs are non-expenditure costs, such as the owner's time and the foregone wages that could be earned elsewhere. Therefore, implicit costs refer to non-expenditure costs, and explicit costs refer to out-of-pocket costs.

Implicit and Explicit Costs Are Different in That