Define implicit cost. How is it different from explicit cost?
Define implicit cost. How is it different from explicit cost?
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The Implicit Cost is the implied cost that does not take a form of cash outlay, and neither is recorded in the books of accounts. Explicit Costs are those cash payments which firms make to outsiders for their services and goods.
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Implicit cost refers to the cost of self-supplied factors or the factors owned and employed by the firm itself, e.g., the salary of an entrepreneur. Whereas explicit cost is the expense incurred for outside payment or hired factors.
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