Indicate whether each of the ff is explicit cost or implicit.?
a.)payment to ibm for computers.
b.) managers salary.
c.)salary forgone by owner of a firm by operating his or her own company.
d.)interest forgone on a loan an owner makes to his or her company.
e.)medical insurance payments a company makes for its employees.
f.)income forgone while going to college..
Answer:
They make this easy for you. If it says "Forgone" it is implicit. Explicit costs are ones which you actually must pay someone. A,B,E all require payments. Going to college and not earning the money you would have earned is an implicit cost - there is no cash paid it is what you could have made. C,D and F are all implicit.
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b.) managers salary.
c.)salary forgone by owner of a firm by operating his or her own company.
d.)interest forgone on a loan an owner makes to his or her company.
e.)medical insurance payments a company makes for its employees.
f.)income forgone while going to college..
Answer:
They make this easy for you. If it says "Forgone" it is implicit. Explicit costs are ones which you actually must pay someone. A,B,E all require payments. Going to college and not earning the money you would have earned is an implicit cost - there is no cash paid it is what you could have made. C,D and F are all implicit.
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