InterviewSolution
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InterviewSolution
| 1. |
An individual is both the owner and the manager of a shop taken on rent. Identify implicit cost and explicit cost from this information. |
| Answer» In the given case, rent paid for a shop is explicit cost because it is the expense incurred by the producer for purchasing the inputs from market. As a manager, the owner is rendering his own services. Managerial services are not hired from the market. So they are implicit cost as these costs are incurred on the use of self-owned inputs. | |