Explicit Costs

question 18

Multiple Choice

Explicit costs

• A) Include only payments to entrepreneurship.
• B) Are the sum of actual monetary payments made for resources used to produce a good.
• C) Include the market value of all resources used to produce a good.
• D) Are the total opportunity costs of resources used to produce a good.

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Definitions:

Total Contribution Margin

The total amount remaining from sales revenue after all variable costs are deducted, used to cover fixed costs and profit.

Margin of Safety

The difference between actual sales and the break-even point, indicating the amount by which sales can drop before the business incurs a loss.

Capital Intensive

A business process or industry that requires large amounts of money and financial resources to produce a good or service.

Break-even Point

The juncture where the sum of all expenses matches the sum of all income, leading to neither a profit nor a deficit.