Question

Identify the following as explicit costs or implicit costs. Joe takes a week off from his job to care for his grandmother. [Select] Select] explicit cost implicit cost ck to college. (Select ] Fred buys car insurance. [Select] ww Brenda pays her apartment rent even though she is living at home with her Im; Feb alrea 01 Wh parents during the COVID -19 Pandemic. (Select] www.kl Explic Revenue ofitis - Previous Next inspiron

Answer 1

Explicit costs are the costs which includes cash payment to outsiders. It is a charge for use of services. While on the other hand, implicit costs are the imputed costs which doesn't involve payment. It is the value of sacrifice made and can not be easily measured.

1. A week off from his job by Joe to take care of his grandmother does not involve payment of cash to any outsider and it is just the value of his sacrifice made towards his grandmother. Therefore, it will be termed as Implicit cost.
2. Buying of car insurance by Fred involves payment of cash to outsider and that too for use of services. Therefore, it will be an Explicit cost.
3. Payment of rent by Brenda for the apartment even she is not living there, is an explicit cost, as she has been using the services and just taken a break from the use of services but still she has to make the payment. So, it will be categorized as Explicit cost.