Answer to Question #216310 in Macroeconomics for Tami

Question

Derek loans an amount from the bank to start a business. The annual interest is 11 percent on the loan amount. He has to pay the interest amount in equal monthly installments. From his business’s perspective, the interest that he has to pay is a type of:

Select one:

a. variable cost.

b. opportunity cost.

c. accounting cost.

d. sunk cost.

e. marginal cost.

Answer 1

c)Accounting cost.

Interest on loan is recorded in accounting cost.

It is a type of fixed cost incurred every month in equal amount.,which is a part of accounting cost.