Principles of Microeconomics / Unit 6 MIC 0503 short lesson, about 20 seconds
Explicit and Implicit Costs
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The idea
Explicit costs are payments the firm makes: wages, rent, materials. Implicit costs are the opportunity costs of resources the firm already owns, such as the owner's forgone salary.
In practice
Running a shop from the ground floor of your own house costs the rent you could have charged.
Where people slip
An implicit cost never appears in the books, and it is still a cost.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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