The implicit costs arise when ________________.

Funds are raised

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Funds are used

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Funds are externally used

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None of the above

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Solution

The correct option is B Funds are used
An implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns and thus does not pay rent. It is the opposite of an explicit cost, which is borne directly.

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