The Choices Listed Below Involve Costs to the Firm

question 91

Multiple Choice

The choices listed below involve costs to the firm. For which is the implicit cost potentially different than its explicit cost?

• A) The use of firm- owned assets.
• B) The use of rented land.
• C) The services of hired workers.
• D) The purchase of raw materials used in production.
• E) The interest paid on borrowed money.

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Definitions:

Breach of Contract

The failure to fulfill the terms of a contract by one or more parties involved.

Injunction

A legal order issued by a court that directs an individual or entity to do or refrain from doing a specific action.

Contractual Duty

An obligation imposed by a contract that requires a party to act or refrain from acting in a certain way.

Liquidated Damage

An amount of money, agreed upon by parties in a contract, to be paid as compensation by one party to the other in the event of a breach of contract.