Suppose you are an owner of shop. Which of the following is an implicit cost associated with the…
Implicit costs are the opportunity costs of self-owned and self-employed resources used by the entrepreneur for which no explicit monetary payment is made. The time the…
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Suppose you are an owner of shop. Which of the following is an implicit cost associated with the operation of shop ?
Answer and explanation
Correct answer D
Implicit costs are the opportunity costs of self-owned and self-employed resources used by the entrepreneur for which no explicit monetary payment is made. The time the owner spends working in the shop (foregone salary elsewhere) is an implicit cost, whereas insurance, electricity bills, and property taxes are explicit costs.
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RPSC Assistant Professor (College Education)