Economics · Cost Concepts
What is meant by an explicit cost?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is an un-priced opportunity cost that a firm must give up to use internal factors of production.
- 2It represents the loss of potential profit from alternative opportunities without actual cash outflow.
- 3It is a direct monetary payment made to outsiders in the course of running a business, such as wages, rent, and materials.✓
- 4It is the only cost necessary to calculate economic profit, as it reflects implicit assumptions.
Correct answer
It is a direct monetary payment made to outsiders in the course of running a business, such as wages, rent, and materials.
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