Which of the following represent an explicit cost of the bus

Which of the following represent an explicit cost of the business and which represent an implicit cost and WHY?

a. Supplies such as paint striper, varnish, sandpaper, and so on.

b. Restaurant space that has been converted into a workroom.

c. Paying $10 a hour to a part-time helper.

d. A van that was invented and use only for transporting furniture.

e. The job at a larger furniture restorer that was gave up in order to run the furniture business.

Solution

ANSWER:

1) Explicit because it will be used to run the business on daily bases.

2) Implicit because the space could have been used for some other purpose.

3) Explicit because paying $10 to a helper helps in running the business.

4) Implicit because van could have been used to generate money in some other way.

5) Implicit because it is an opportunity lost in order to run the furniture business.