Which of the Following Is an Implicit Cost

question 29

Multiple Choice

Which of the following is an implicit cost?

• A)salaries paid to owners who work for their own firm
• B)interest on money borrowed to finance equipment purchases
• C)cash payments for raw materials
• D)wages paid to hourly employees
• E)foregone rent on office space owned and used by the firm

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Definitions:

Profit or Loss

The financial result of business operations, calculated as the difference between revenue and expenses, indicating the financial health of the business.

Excess Capacity

A situation where a firm is operating below its maximum output level, indicating that the company can produce more goods with the existing resources if there is higher demand.

Marginal Cost

The rise in overall expenses incurred from the production of an additional single unit of a product or service.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing and able to purchase at various price levels at a given time.