EBK ECONOMICS
EBK ECONOMICS
21st Edition
ISBN: 8220106637173
Author: McConnell
Publisher: YUZU
bartleby

Concept explainers

Question
Book Icon
Chapter 9, Problem 1DQ
To determine

Explicit and implicit cost with example.

Expert Solution & Answer
Check Mark

Explanation of Solution

Explicit costs are the payments made to the resources in order to attract the resource from other uses. For example, wages to the employees, price for the inputs.

Implicit cost is the given up activity in order to take up the other activity. For example, the owner of the firm has to give up the salary he could earn by getting employed in some other firm, in order to manage his own firm. The opportunity cost of managing his own business is an implicit cost.

The explicit cost of attending college includes all the costs incurred such as college fee, tuition fee, cost of books and other stationeries. This also includes the cost of transportation.

The implicit cost that is involved for the person who go to college is the chance that he loss of getting employed and earn some income.

Economics Concept Introduction

Concept introduction:

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

Implicit costs: An implicit cost refers to any costs that has previously incurred but are not initially shown or reported as separate expenditures. It refers to an opportunity costthat arises when a firm allocates internal resources.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Which of the following factors tend to decrease the wage differential between union and non union workers:   unions tend to organize the firms with the lowest ability to pay initially   all of the above   unions must moderate their wage demand to keep workers competitive   some nonunion employers pay their employees above union wages   only ‘a’ and ‘b’ above
The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry. Price (dollars) 24 8 MC ATC MR 30 D 45 50 Quantity/time The firm will maximize its profit at a quantity of units. After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is S The maximum profit the firm can earn in this situation is $ per unit for this output. How will the situation change over time? Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. ◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. This market is already in long-run equilibrium, and will not…
Explain how are kids well being with the poverty simulation.
Knowledge Booster
Background pattern image
Economics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Text book image
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Text book image
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
Text book image
Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning