A producer borrows money to start a business and looks after the business himself.
A producer borrows money to start a business and looks after the business himself. Identify the implicit and explicit costs from this information. Explain.
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In the given example, the producer borrows money and starts his business, therefore the expenses incurred (interest) on money borrowed is explicit cost. The producer looks after the business himself, therefore, the imputed cost of the efforts of the businessman is implicit cost. Managerial services are not hired from the market
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