Which of the Following Constitutes an Implicit Cost to the Johnston

question 80

Multiple Choice

Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?

• A) Payments of wages to its office workers.
• B) Rent paid for the use of equipment owned by the Schultz Machinery Company.
• C) Use of savings to pay operating expenses instead of generating interest income.
• D) Economic profits resulting from current production.

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Definitions:

Coercive Power

A form of power that is exerted through the use of threats, punishment, or force to influence others to comply with demands or orders.

Legitimate Power

A type of power that is recognized and accepted by the society or organization in which it operates, often derived from a formal position or role.

Tacit Power

Unspoken, yet understood authority or influence that individuals or groups may hold, often derived from social positions or relationships.

Legal-Rational Authority

Is typical of modern societies. It derives from respect for the law. Laws specify how a person can achieve office. People generally believe laws are rational. If someone achieves office by following laws, people respect his or her authority.