Which of the Following Is an Implicit Cost of Production

question 56

Multiple Choice

Which of the following is an implicit cost of production?

• A)the loss in the value of capital equipment due to wear and tear
• B)the salary you pay yourself for running your business
• C)the utility bill paid to water, electricity, and natural gas companies
• D)the interest you pay your mother for the money she loaned you to start your business

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Definitions:

Equivalent Annual Annuity

A calculation used to compare the returns of investments with different payment schedules by converting them into an equivalent sum received at regular annual intervals.

Cost Of Capital

The minimum rate of return that a business must earn before generating value, representing the opportunity cost of investing resources in a specific company instead of elsewhere.

Cash Flow

The aggregate amount of cash and similar liquid assets flowing into and away from a business entity.

Labor Force Participation Rates

A measure of the active portion of an economy's labor force, indicating the percentage of people who are either working or actively looking for work.