Implicit Cost Is a

question 221

Multiple Choice

Implicit cost is a

• A)cost that is incurred when a monetary payment is made.
• B)cost incurred in the past that cannot be changed by current decisions and therefore cannot be recovered.
• C)cost that represents the value of resources used in production for which no monetary payment is made.
• D)sunk cost.
• E)b and d

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Definitions:

Jet Fuel

A type of aviation fuel designed for use in aircraft powered by gas-turbine engines.

Hedge

An investment made to reduce the risk of adverse price movements in an asset, typically involving derivatives contracts like futures and options.

American Call Option

A type of options contract that gives the holder the right, but not the obligation, to buy an asset at a set price at any time before the expiration.

Exercise Price

The cost at which the possessor of an option is allowed to purchase (in the case of a call option) or dispose of (in the case of a put option) the asset underneath.