An Example of an Explicit Cost of Production Would Be

question 454

Multiple Choice

An example of an explicit cost of production would be the

• A)cost of forgone labor earnings for an entrepreneur.
• B)lost opportunity to invest in capital markets when the money is invested in one's business.
• C)lease payments for the land on which a firm's factory stands.
• D)Both a and c are correct.

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Definitions:

Tax Shield Approach

A method used in financial analysis to determine the value of tax deductions, such as interest on debt, which reduces taxable income.

Costs

Expenses incurred in the process of producing or acquiring goods and services, including materials, labor, and overhead.

Depreciation

A method of allocating the cost of a tangible or physical asset over its useful life.

Sales

The activity or business of selling goods or services.