Why is it important to distinguish between explicit and implicit costs?
Please provide the best answer for the statement.
Implicit costs are as important as the explicit costs which are generally the so-called “accounting costs.” For example, economists (but not accountants) would count the income forgone in the use of the owner’s time as an economic cost, the interest forgone by using one’s own funds, and so on for the use of other resources. These implicit costs should be counted so one can judge the true economic or opportunity cost of production. If these costs are neglected, then an over allocation of resources could occur because not all of the production costs are being measured.
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A debit item on the U.S. balance of payments is any transaction that
a. results in a loss by U.S. sellers. b. results in a loss by U.S. buyers. c. makes foreigners use up their holdings of U.S. dollars. d. makes U.S. dollars available to foreigners.
Which part of this definition for GDP is incorrect? GDP measures the:
a. Wholesale value of, b. All final goods and services, c. Produced for the market, d. By domestically owned or foreign-owned resources, e. within a nation's geographic borders.
Which of the following examples would lead to a lower equilibrium price?
a. a report showing the health advantages of eating organic produce b. beef contaminated with a deadly disease c. an earthquake destroying a rice crop d. a tsunami wiping out a pineapple crop
A cartel maximizes industry profit by:
A. eliminating quotas. B. producing at the kink in its demand curve. C. producing where MR = MC. D. producing more output than a monopoly would.