The Choices Listed Below Involve Costs to the Firm

question 47

Multiple Choice

The choices listed below involve costs to the firm.For which is the implicit cost potentially different than its explicit cost?

• A)The use of firm-owned assets.
• B)The services of hired workers.
• C)The use of rented land.
• D)The interest paid on borrowed money.
• E)The purchase of raw materials used in production.

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Definitions:

Property Taxes

Taxes assessed by local governments on real estate and sometimes personal property, based on the property's value.

Factory Insurance

An insurance policy designed to protect manufacturing facilities against losses from events like fire, theft, or natural disaster.

Depreciation

Allocating the expense of a tangible asset across its life of utility in a systematic manner.

Manufacturing Equipment

Tools, machinery, and other durable assets used in the process of producing goods in a manufacturing setting.