Answer to Question #205950 in Microeconomics for hkusvhkds

Question

You are planning to start a business. When calculating the costs. You have considered the costs of setting up your manufacturing plant, production, logistics, and all other costs except for the opportunity cost of your initial investment in this business. Which of the below is true?

A) You calculated the economic cost.

B) You calculated the explict costs.

C) You calculated only the variable costs.

D) You calculated only the fixed costs.

Answer 1

With all the costs covered except for the opportunity cost of your initial investment in this business, you have calculated the explicit costs.

Economic costs also includes the opportunity cost of your initial investment in this business. This is also called the implicit cost. Variable and fixed costs are a part of explicit costs.

So you calculated the explict costs is true.