yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
How do firms incorporate opportunity cost to calculate economic cost? discuss and give example using an explicit economic cost and an implicit economic cost.
the opportunity cost or value of the best by a business
First of all, we need to understand what is explicit cost and implicit cost. Explicit cost mean real expenses, while implicit cost mean opportunity cost. In accounting profit, we only minus explicit cost, while in economic profit we minus explicit cost and implicit cost. therefore accounting profit is higher than economic profit.
Because opportunity cost doesn't show up as an accounting expense.
yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
How do firms incorporate opportunity cost to calculate economic cost? discuss and give example using an explicit economic cost and an implicit economic cost.
Explicit cost and Implicit cost are the two dimensions of cost What role does cost play in financial decisions?
the opportunity cost or value of the best by a business
There is almost an implicit assumption that tutors know about these things.
First of all, we need to understand what is explicit cost and implicit cost. Explicit cost mean real expenses, while implicit cost mean opportunity cost. In accounting profit, we only minus explicit cost, while in economic profit we minus explicit cost and implicit cost. therefore accounting profit is higher than economic profit.
Because opportunity cost doesn't show up as an accounting expense.
According to the "Bible" for accounting terminology, Barron's Dictionary of Accounting Terms, 5th Edition, they are the same. In fact, when you look up implicit cost, it refers you to imputed cost. This is the definition of imputed cost: "A cost that is implied but not reflected in the financial reports of the firm: also called implicit cost. Imputed costs consist of opportunity costs of time and capital that the manage has invested in producing the given quantity of production and the opportunity costs of making a particular choice among the alternatives being considered."
Helps them complete their 8000 series
explicit is the market value of all inputs purchased by a producer while implicit cost is the market value of inputs owned by the producer himself.
Yes, investment is an implicit cost because it is a firm investing their own money in something that (by definition of an opportunity cost) could have been invested in something else. Investment is the opportunity cost of a firm using their own money, and whether or not the opportunity that the firm invested in is worthwhile is defined by the NROR (the normal rate of return).
Fcuk u. Go n search it urself.