Compare/contrast explicit and implicit costs.
Solution
Explicit costs are those cost that are entered in the books of account. Examples are payment of
wages, rent, and payment for the material. These expenses are entered in the accounting books
and accounting profit / loss is identified.
Implicit cost is implied cost. They are also called as opportunity cost. It does not incur any direct
payment but it is the opportunity forgone to do current operation.
Implicit cost is used to determine economic profit..
Comparecontrast explicit and implicit costs.SolutionExplicit .pdf
1. Compare/contrast explicit and implicit costs.
Solution
Explicit costs are those cost that are entered in the books of account. Examples are payment of
wages, rent, and payment for the material. These expenses are entered in the accounting books
and accounting profit / loss is identified.
Implicit cost is implied cost. They are also called as opportunity cost. It does not incur any direct
payment but it is the opportunity forgone to do current operation.
Implicit cost is used to determine economic profit.
