Explicit costs are readily quantifiable monetary payments a firm makes to obtain resources from another party. Implicit costs refer to the monetary income a firm gives up by using its own resources internally rather than supplying them to the open market for alternative uses. Together, explicit and implicit costs represent the total economic costs incurred by a firm.

2. Explicit Costs
Are usually obvious and readily
quantifiable monetary payments a firm
makes to another party to obtain
resources.

3. IMPLICIT COSTS
May be considered as the monetary income a firm
sacrifices when it uses its own resources
rather than using these resources as those that
can be supplied to the open market for
alternative uses.