Mastering Explicit and Implicit Costs
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Questions and Answers

Which of the following is an example of an explicit cost?

  • Return on entrepreneur's own investment
  • Salary of the proprietor
  • Prices of materials (correct)
  • Opportunity cost while allocating internal resources towards a project

Which of the following is an example of an implicit cost?

  • Opportunity cost while allocating internal resources towards a project
  • Return on entrepreneur's own investment
  • Salary of the proprietor (correct)
  • Prices of materials

What is the formula for calculating economic profit?

  • Explicit Cost + Implicit Cost
  • Total Revenue - Accounting Cost
  • Total Revenue - Economic Cost (correct)
  • Accounting Profit - Implicit Cost

Which of the following is an example of a short run?

<p>That period of time during which at least one factor of production must remain fixed, e.g. capital (C)</p> Signup and view all the answers

What is the difference between short run and long run?

<p>Short run is a period of time in which it is possible to vary output by varying all factors of production within the given state of technology, while long run is a period of time during which factors of production can be varied to the fullest extent (C)</p> Signup and view all the answers

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