The implicit cost incurred by a firm to use its resources to produce its output is the firm's

Question

BlackTom AI · Accepted Answer

The question asks about the implicit cost incurred by a firm when using its own resources to produce its output. This concept is tied to the idea of opportunity cost, which represents the value of the best alternative foregone when a choice is made.
Option 1: 'accounting cost.' Accounting cost typically records explicit outlays such as wages, rent, and materials. It does not capture the foregone alternative use of the firm’s resources, so it misses the implicit cost aspect.
Option 2: 'total cost.' Total cost usually combines explicit costs (outlays) with implicit costs (opportunity costs). While related, the implicit portion is just a part of total cost, not the whole.
Option 3: 'explicit cost.' Explicit costs are direct, out-of-pocket payments made by the firm for resources. They exclude the opportunity costs of using internal resources, hence they do not represent the implicit cost asked in the question.
Option 4: 'opportunity cost.' This is the best fit for the described idea: the value of the next best alternative use of the firm’s resources, i.e., the implicit cost of using those resources for current production.
Overall, the question contrasts explicit accounting measurements with the broader concept of what the firm sacrifices by using its own resources, which aligns with opportunity cost rather than the other listed terms.

econ_102_120251_245827 Lesson 7 Graded Quiz

The implicit cost incurred by a firm to use its resources to produce its output is the firm's

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econ_102_120251_245827 Lesson 7 Graded Quiz

The implicit cost incurred by a firm to use its resources to produce its output is the firm's

View Explanation

Log in for full answers

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