Which of the following is the best example of an explicit cost?out of these 4 which one is the best example of explicit cost? an employee's wages entrepreneurial income accounting profit foregone...

Which of the following is the best example of an explicit cost?

out of these 4 which one is the best example of explicit cost?

an employee's wages

entrepreneurial income

accounting profit

foregone interest

Asked on by skyler89

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Of these, the best example of an explicit cost is the first one; an employee’s wages.

Explicit costs are those costs that the owner of a firm has to pay to other people.  This covers everything that we would normally think of as a cost of doing business.  It covers such things as the wages paid to employees, the rents paid on buildings, and the costs of the materials used to make a product.  This is in contrast to implicit costs, which are the value of things (such as the wages they could be making in a different job) that the owner of a firm foregoes in order to run the firm.  Of the choices given, an employee’s wages are most clearly an example of an explicit cost.

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