Question

Economic costs include ____________.

• A. the normal return on money capital invested by the entrepreneur himself in his own business.
• B. wages to paid or payable to workers employed
• C. the wages or salary not paid to the entrepreneur but could have been earned if the services had been sold somewhere else.
• D. both (A) and (C)

Answer 1

Answer: (D)

both (A) and (C)

Economic costs include both implicit costs and explicit costs. Implicit costs are the opportunity cost of engaging in business activity. Its is the return forgone by using the owned resource in productive activity. An example is the normal return on money capital invested by the entrepreneur himself in his own business. The explicit costs are accounting cost involved in production such as wages, raw material costs etc.