Which of the Following Is Most Likely to Be an Implicit

question 269

Multiple Choice

Which of the following is most likely to be an implicit cost for Company X?

• A)forgone rent from the building owned and used by Company X
• B)rental payments on IBM equipment
• C)payments for raw materials purchased from Company Y
• D)transportation costs paid to a nearby trucking firm

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Definitions:

Present Value

The calculated present value of a prospective sum of money or cash flow stream, utilizing a given rate of return.

Land

In economics, land refers to all natural resources used to produce goods and services, including not just real estate but also agricultural land, forests, and mineral resources.

Demand

The amount of a product or service that buyers are ready and capable of buying at different price levels over a specific period.

Rent

A payment made by a tenant at regular intervals in exchange for the use of land, a building, an apartment, an office, or other property.