Economists Consider Both Explicit and Implicit Costs When Measuring Economic

question 100

Multiple Choice

Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that:

• A) they are more conservative than accountants, who consider only accounting costs.
• B) most businesses forget to pay their implicit costs.
• C) a business must cover its opportunity costs as well as its out-of-pocket expenses to be truly profitable.
• D) implicit costs are typically far larger than explicit costs.
• E) implicit costs include expenses like taxes and fees to the government.

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Definitions:

Annual Reports

Comprehensive statements that provide information on a company's activities, financial performance, and strategy over the past fiscal year.

Off-Balance-Sheet

Financial obligations or assets not recorded on a company's balance sheet, often due to being contingent or uncertain.

Disposal of a Segment

The act of selling, liquidating, or otherwise eliminating a division or segment of a business.

Income Statement

An income statement is a financial document that details a company's revenues and expenses over a specific time period, culminating in net profit or loss.