Which of the Following Is an Implicit Cost of Production

question 172

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:

Normal Good

A good for which demand increases as the income of the consumer increases, showing a positive relationship between income and demand.

Complements

Goods that are consumed together because the use or enjoyment of one good enhances the use or enjoyment of the other.

Consumer Income

The total amount of income a consumer earns, influencing their purchasing power and spending patterns.

Edgeworth Box

A visual representation used in economics to show the distribution of resources and the efficiency of trading between two individuals.