Which of the Following Is an Example of an Implicit

question 163

Multiple Choice

Which of the following is an example of an implicit cost?

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

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Definitions:

Manufacturing Production

The process of converting raw materials or components into finished goods through the use of machinery and labor in factories.

Means of Production

The resources, such as land, factories, and tools, required for the production of goods and services.

Proletariat

In Marx’s usage, is the working class. Members of the proletariat perform physical labor but do not own means of production. They are thus in a position to earn wages.

Lumpenproletariat

A term used primarily in Marxist theory to describe the lower strata of the working class, including those who are unemployed or unemployable due to the lack of necessary skills.