Which of the Following Would Be Considered an Implicit Cost

question 67

Multiple Choice

Which of the following would be considered an implicit cost?

• A) Health insurance of employees paid for by the firm
• B) The water bill of the firm
• C) The salaries paid to the managers of the firm
• D) Foregone rent on assets owned by the firm

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Definitions:

Marginal Product

The additional output that is produced by adding one more unit of a specific input, ceteris paribus (with all other inputs held constant).

Bushels

A unit of volume that is used to measure agricultural commodities like grains and fruits.

Total Product Curve

A graphical representation of the production function, showing how the quantity of output depends on the quantity of the variable input for a given quantity of the fixed input.

Fixed Input

An input whose quantity is fixed for a period of time and cannot be varied (for example, land).