Explicit cost is the out of pocket cost which includes actual money expenses incurred by the firm for using factors of production. | Implicit cost is imputed or oppotunity cost of factors owned by firm but not actually paid for to outsider. |
IT helps in calculating both accounting and Economic profit. | It helps in calculating only Economic profit. |
It results in outflow of cash | It does not result in outflow of cash |
It is shown in the books of accounts | It is not shown in accounting books |
It can be determined easily | As it the opportunity cost of owning factors, it can't be easily determined |
For example-----wages/ salaries to workers/staff, rent , interest on loan, office expenses, raw material cost | Example----- Rent for self owned building, salary for own services, Interest on self employed capital |
It is used for income tax purposes | It is not used for IT purposes. |
# Some explicit and implicit cost for attending college ----------------------
*Explicit cost-------
expenses on books
Transportation expenses
College tuition fee
College lab fee
Cost incurred on buying laptop/ computer
*Implicit cost------------
Forgone salary------ If not joined college
Sacrificed interest earnings ( if money spent for joining college were deposited in bank)
# Distinguish between Accounting Profit , Economic Profit and normal Profit----------
Accounting profit | Economic profit | Normal profits |
It is difference between firm' s revenue and explicit cost | It is the difference between firm' s revenue and total cost( implicit + explicit) | It is the minimum amount required to keep the business firm running. |
Accounting profit------:- Revenue-explicit cost | Economic Profit------: Revenue-(explicit cost + implicit cost) | Normal profits--------: explicit cost + implicit cost |
It gives true picture of financial condition of the firm ,is used for income tax purposes | It may not give true picture of firm' s financial health, so is not used for IT purpose | It is a particular stage when firm is just recovering its total cost. The stage of econiy Profit comes after it. |
It is determined by GAAP | It is determined by Economic principles | It is a break even point (w no profit isno loss),a pre stage of moving towards economic Profit. |
# It is the Economic profit which determines how entrepreneurs allocate resources between different business ventures.The readon is Economic Profit considers both implicit cost and explicit cost ,that actual vost paid to outsider plus opportunity cost( cost foregone)
# Fixed and variable cost associated with owning and operating an automobile-------
* Fixed cost----
Price of vehicle ( EMI)
Depreciation
Insurance
Driving licence fee
Interest on loan
Registration and taxes
* Variable cost-------
Fuel charges ( petrol / diesal)
Repairs
Partial maintenance charges
Toll tax
Car wash
# It is both explicit and implicit cost which will be taken into account while making decisions regarding driving a car or fly about 770 miles to colorado for summer vacation.
Explicit cost----- Expenses of fuel, Depreciation in case of car driving.While air ticket charges in case of air travel.
# yes ,there is implicit cost underneath-----
The hefty amount spent on vacation could be used to neet out other demands plus time spent in vacation could be used in earning.
please discuss in detail using facts data and examples Distinguish between explicit and implicit costs, giving...
Please help with these questions, thanks 1) Distinguish between explicit and implicit costs, and between normal and economic profits. 2) Explain why normal profit is an economic cost, but economic profit is not. 3) Explain the law of diminishing returns. 4) Explain the relationship between total, marginal, and average product. 5) Distinguish between fixed, variable and total costs. 6) Explain the difference between average and marginal costs.
1. Distinguish between explicit and implicit costs, giving 3 examples of each using the production of higher education. 2. Which of the following are short-run and which are long-run adjustments? Freddie’s Frozen Custard builds 5 new restaurants. Pioneer Balloon Corporation hires 200 more production workers. Gaddert Farms increases the amount of fertilizer used on their corn crop. Boeing closes its manufacturing facility in Wichita, sells the plant and moves to Oklahoma City.
Please help with these questions, Question 21 0.16 pts One difference between implicit costs and explicit costs is that implicit costs are included in economic profits, whereas explicit costs are not. explicit costs are included in economic profits, whereas implicit costs are not. O implicit costs are included in accounting profits, whereas explicit costs are not. explicit costs involve opportunity costs, whereas implicit costs involve a monetary transaction. explicit costs are included in accounting profits, whereas implicit costs are not....
1. Distinguish between direct and indirect costs with 2 examples of each. 2. Why is it important the differences between the two variables discussed in 1 as a manager? 3. Distinguish between fixed, variable, and semivariable costs. 4. You have been presented with a mixed costs sheet and you need to perform some analyzes to write your report for the year. Select and explain what graph will be more accurate for this analysis.
osts of Production: Differentiating Explicit & Implicit Costs Bob's Bed & Breakfast (15 marks) Bob recently quit a job that paid him $2,500 per month in order to buy a bed and breakfast house in a remote corner of Vancouver Island. The motivation for his life style change came from a surprise inheritance from his long lost uncle who he had never met. His uncle, feeling guilty for never sending "birthday money to his sister's son, had left Bob money...
c) The demand function for books in Pick n Pay is given by P quantity demanded and P is the price per book. 50-0.3Q, where Q is the i. Find the number of books that will be bought when the price is K2. ii. iii. Find the price elasticity of the demand when the number of books bought is 30. ] Calculate the percentage change in quantity demanded when the price increases by 10% (use the coefficient price elasticity of...