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Answer to Question #52908 in Microeconomics for Yana

Question #52908
Production Costs

1.Explicit costs would include:
a. rent.
b. the interest loss of the business owner on money withdrawn from his/her saving account
and invested in the business.
c. the loss of rent on a building the business owner owns and uses in his/her business.
d. the opportunity costs of the business owner's time.
e. the use of tools owned by the business owner and dedicated to the business.
2. Unlike implicit costs, explicit costs:
a. reflect opportunity costs.
b. include the value of the owner's time.
c. are not included in the accounting statement of the firm.
d. are actual cash payments.
e. do not change with the output rate of the firm.
Expert's answer
1.Explicit costs would include only rent, because the other costs listed are the examples of implicit costs. So, the right answer is:a. rent.2. Unlike implicit costs, explicit costs are real costs, but not the opportunity costs of doing something else, so the right answer is:d. are actual cash payments.

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