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.
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.
3
Q
A