Chapter 4: Market Structures Flashcards

1
Q

Explicit Costs

A

Explicit costs are direct payments to factors of production (FOP) not owned by the firm. It involves actual monetary transaction.

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2
Q

Implicit Costs

A

Implicit costs are those that do not involve a direct monetary payment to a third party but forces the firm to incur opportunity costs. This costs arise when the firm employs factors of production (FOP) already owned by it.

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3
Q
A
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