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What is the main difference between explicit costs and implicit costs?
What is the main difference between explicit costs and implicit costs?
- Explicit costs are accounting costs, while implicit costs are not recorded in the firm's accounts.
- Explicit costs are monetary payments made to suppliers, while implicit costs are the values of self-owned resources used by the firm. (correct)
- Explicit costs are the costs of raw materials, while implicit costs are the costs of labor and capital.
- Explicit costs are the actual cash outlays made by the firm, while implicit costs are the opportunity costs of the firm's own resources.
Which of the following is an example of an implicit cost?
Which of the following is an example of an implicit cost?
- Wages paid to employees
- The estimated value of the owner's time spent managing the business (correct)
- The rent paid for the firm's office space
- The cost of raw materials used in production
Why do economists and accountants define and treat costs differently?
Why do economists and accountants define and treat costs differently?
- Economists and accountants have different goals and perspectives in analyzing business activities. (correct)
- Economists consider opportunity costs, while accountants only consider actual cash outlays.
- Economists focus on explicit costs, while accountants focus on implicit costs.
- Economists are more interested in profit maximization, while accountants are more interested in cost minimization.
Which of the following is NOT considered an explicit cost for a business firm?
Which of the following is NOT considered an explicit cost for a business firm?
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Why are explicit costs also referred to as 'accounting costs'?
Why are explicit costs also referred to as 'accounting costs'?
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Which of the following is included in economic cost but not in accounting cost?
Which of the following is included in economic cost but not in accounting cost?
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Which of the following is an example of a fixed cost?
Which of the following is an example of a fixed cost?
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If a firm's total cost is $100,000 and its total fixed cost is $40,000, what is its total variable cost?
If a firm's total cost is $100,000 and its total fixed cost is $40,000, what is its total variable cost?
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If a firm's total variable cost is zero, what can be inferred about its output level?
If a firm's total variable cost is zero, what can be inferred about its output level?
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Which of the following statements is true about explicit costs?
Which of the following statements is true about explicit costs?
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