The Implicit Cost of Capital Is

question 13

Multiple Choice

The implicit cost of capital is:

• A)the expense associated with leasing machines.
• B)the expense associated with buying machines.
• C)the opportunity cost of capital used by a business.
• D)irrelevant for determining economic profit.

---

Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than others.

Trade

Trade involves the exchange of goods or services between parties, which can be within a country or between countries.

Resources

Economic or productive factors required to accomplish an activity, or to provide a service or product, such as land, labor, and capital.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen; the value of the next best alternative foregone.