Identify the implicit cost and explicit cost.

Question

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Answer 1

Question

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

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Answer 2

Question

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

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Answer 4

Question

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 6

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 7

Chapter 7, Problem 1SQP

(a)

To determine

Identify the implicit cost and explicit cost.

Answer 8

(a)

Expert Solution

Explanation of Solution

Manager’s salary is an explicit cost because salary is a direct cost that is involved in the process of running a business.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 13

(b)

To determine

Identify the implicit cost and explicit cost.

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 14

(b)

To determine

Identify the implicit cost and explicit cost.

Answer 15

(b)

Expert Solution

Explanation of Solution

Payment to Dell for computers is an explicit cost because this cost involves in spending money.

Answer 16

(b)

Expert Solution

Answer 17

(b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 20

(c)

To determine

Identify the implicit cost and explicit cost.

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 21

(c)

To determine

Identify the implicit cost and explicit cost.

Answer 22

(c)

Expert Solution

Explanation of Solution

Salary forgone by the owner of a firm by operating his or her own company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost.

Answer 23

(c)

Expert Solution

Answer 24

(c)

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 27

(d)

To determine

Identify the implicit cost and explicit cost.

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 28

(d)

To determine

Identify the implicit cost and explicit cost.

Answer 29

(d)

Expert Solution

Explanation of Solution

Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment if he lent the amount outside the business. Thus, he has given up his interest rate.

Answer 30

(d)

Expert Solution

Answer 31

(d)

Expert Solution

Answer 32

Expert Solution

Answer 33

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 34

(e)

To determine

Identify the implicit cost and explicit cost.

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 35

(e)

To determine

Identify the implicit cost and explicit cost.

Answer 36

(e)

Expert Solution

Explanation of Solution

Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly.

Answer 37

(e)

Expert Solution

Answer 38

(e)

Expert Solution

Answer 39

Expert Solution

Answer 40

Economics Concept Introduction

Explicit cost: Explicit cost refers to a direct cost incurred by the firm to others in the process of running a business such as wages, rents, materials, and so on. Thus, fixed cost and variable cost are included in the explicit cost.

Answer 41

(f)

To determine

Identify the implicit cost and explicit cost.

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.

Answer 42

(f)

To determine

Identify the implicit cost and explicit cost.

Answer 43

(f)

Expert Solution

Explanation of Solution

Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there is a fall in the opportunity cost.

Answer 44

(f)

Expert Solution

Answer 45

(f)

Expert Solution

Answer 46

Expert Solution

Answer 47

Economics Concept Introduction

Implicit costs: Implicit cost refers to the costs that have previously been incurred but are not initially shown as a separate expenditure. It denotes an opportunity cost that arises when a firm allocates internal resources.