An implicit cost is any cost that has already taken place but is not shown or reported as an expense. It represents a loss of income, but it does not represent any loss of profit.
Opportunity cost is referred to as a potential benefit that an individual, business organisation or investor misses out when choosing an alternative option over another. The objective of opportunity cost is to ensure that scant resources are efficiently used.
Let us look at some of the points of difference between implicit cost and opportunity cost.
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Implicit Cost |
Opportunity Cost |
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Definition |
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Implicit cost is the cost that has been already incurred by the individual or business, but it has not been reported as a separate expense |
Opportunity cost is referred to as any potential benefit that any business or individual misses out when choosing an alternative option over another |
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Part of |
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Implicit cost is a type of opportunity cost |
Opportunity cost is of two types : implicit costs and explicit costs |
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Example |
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For example: If someone is giving up on sweets to reduce weight, then opportunity cost for this instance will be the cost of sweets and the desire to have sweets |
For example: A business owner in a start-up does not take salary in the initial days of business, it can be considered as an implicit cost |
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