What are the concepts involved in economic cost?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

Economic costs involve both explicit and implicit costs.  They take into account both what is actually spent on something and the opportunity cost of doing it.

Explicit costs are the payments you actually make in order to do something like running a business.  If you own a business putting logos and other designs on t-shirts, you have explicit costs like the cost of the t-shirts and the wages of your employees.

Implicit costs are the opportunity costs of running your business.  In the example given above, imagine that you had quit your job to run this business.  You implicit cost would be the salary that you gave up when you quit.


Approved by eNotes Editorial Team
Illustration of a paper plane soaring out of a book

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial