Question

explain implict and explict cost !​

Answer 1

In Economics or Business,explicit costs are identified as those costs or expenses which are directly related to the production process in any business operation.

Implicit costs are those costs or expenses in any business activity that are considered as opportunity costs and indirectly related to business operation.

Explanation:

Key difference between explicit and implicit cost:-

• Explicit costs are directly related with the production of goods and services by the firms or companies and vary according to the quantity of level of production or output.Implicit cost is the indirect opportunity cost in business that mainly reflects the cash outflow of any firm/company.
• Examples of explicit costs are the costs or expenses to purchase or rent the factors/inputs of production that are directly utilized in the production process.Implicit costs can arise from the acquisition and maintenance of any company asset that are not directly related to business operation or production process.
• Explicit costs are officially recorded in financial and accounting books of any firm or business organisation.Implicit costs are mainly unrecorded costs or expenses from an accounting standpoint.
• Explicit costs are used to calculate both accounting and economic profit but implicit costs are used to calculate only economic profit.
• The calculation method of explicit costs is completely objective,whereas,in the case of implicit costs it is totally objective.

Answer 2

Answer:

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