[amp_mcq option1=”Equal to total fixed costs” option2=”Comprised entirely of variable costs” option3=”Payments for self-employed resources” option4=”Always greater in the short-run than in the long-run” correct=”option3″]<\/p>\n
The correct answer is: C. Payments for self-employed resources.<\/p>\n
Implicit costs are the opportunity costs of using resources that are owned by the firm. They are not paid out in cash, but they represent the value of the resources that could have been used for other purposes. For example, if a firm owns its own building, the implicit cost of using the building is the rent that could have been earned if the building had been rented out.<\/p>\n
Implicit costs are not included in the firm’s accounting costs, but they are important to consider when making economic decisions. For example, a firm may decide to produce a product even if its accounting costs are higher than the market price of the product. This is because the firm may be taking into account the implicit costs of using its own resources, which are not included in its accounting costs.<\/p>\n
A. Equal to total fixed costs is incorrect. Implicit costs are not equal to total fixed costs. Fixed costs are costs that do not change with the level of output, while implicit costs are costs that do change with the level of output. For example, if a firm owns its own building, the implicit cost of using the building is the rent that could have been earned if the building had been rented out. This cost will change if the firm produces more or less output.<\/p>\n
B. Comprised entirely of variable costs is incorrect. Implicit costs are not comprised entirely of variable costs. Variable costs are costs that change with the level of output, while implicit costs are costs that do not change with the level of output. For example, if a firm hires workers, the wages paid to the workers are variable costs. However, if the firm owns its own building, the implicit cost of using the building is the rent that could have been earned if the building had been rented out. This cost is not a variable cost, because it does not change with the level of output.<\/p>\n
D. Always greater in the short-run than in the long-run is incorrect. Implicit costs are not always greater in the short-run than in the long-run. In some cases, implicit costs may be greater in the long-run than in the short-run. For example, if a firm owns its own building, the implicit cost of using the building is the rent that could have been earned if the building had been rented out. This cost may be greater in the long-run than in the short-run, if the rent that could have been earned in the long-run is higher than the rent that could have been earned in the short-run.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Equal to total fixed costs” option2=”Comprised entirely of variable costs” option3=”Payments for self-employed resources” option4=”Always greater in the short-run than in the long-run” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-56418","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n