"nonpurchased" - 1 õppematerjal

The cost of production

uses it. Explicit Cost = payments by a firm to purchase the service of productive resources (wages, interest, rent, capital) Explicit Costs Explicit costs are those costs where there is an actual expenditure in a market. The costs of labour or interest payments are examples. Costs Implicit Costs: measured in units of money, but are not paid for directly in money. The costs of nonpurchased inputs, to which a cash value must be imputed because the inputs are not purchased in a market transaction. - A firm incurs implicit costs when it uses capital, inventories or owner's resources. Implicit Costs = opportunity costs associated with a firm's use of resources that it owns (wages foregone by owner, interest rates loss through purchases) Some implicit costs are estimated and used in the decision process. Depreciation is an example.