Question

Identify the implicit cost and explicit cost from the given cases; 3-M

a. Payments for labour purchased for outside market.

b. The use by a firm of a warehouse owned by the firm that could be rented out to another

firm.

c. Rent paid for the use of warehouse not owned by the firm.

d. The wages that owner could earn if they did not work for themselves.

Answer 1

a.)Payments for labour purchased for outside market. Explicit costs

b.) The use by a firm of a warehouse owned by the firm that could be rented out to another

firm. Implicit costs

c. Rent paid for the use of warehouse not owned by the firm. Explicit costs

d. The wages that owner could earn if they did not work for themselves.Implicit costs