Question

________ take into account accounting costs but in addition, also takes into account the amount of money the entrepreneur could have earned if he had invested his money and sold his own services and other factors in the next best alternative uses.

• A. Cash cost
• B. Accounting costs
• C. Economic costs
• D. Direct cost

Answer 1

The correct option is C Economic costs

Economic cost includes but explicit and implicit costs of production. The accounting costs and sunk costs are explicit costs. The implicit costs usually consist of opportunity costs such as entrepreneurs salary elsewhere and interest earned on capital.