An Example of an Opportunity Cost That Is Also an Implicit

question 11

Multiple Choice

An example of an opportunity cost that is also an implicit cost is

• A)a lease payment.
• B)the cost of raw materials.
• C)the value of the business owner's time.
• D)All of the above are correct.

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Definitions:

Marginal Product

The extra production generated when one more unit of a particular input is added, with all other inputs remaining unchanged.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.

Diminishing Returns

A principle stating that as additional amounts of a variable input are added to a fixed input, beyond some point the marginal product of the variable input begins to decrease.