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Production and cost — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsProduction and cost2 Marks
Question
Distinguish between explicit cost and implicit cost.
✓

Answer

S No.
Explicit Cost
Implicit Cost
(a)
Explicit costs are the costs which are incurred by making payments to the factors hired or purchased.
Implicit costs are the costs which are estimated value of inputs provided by the owners themselves.
(b)
It is ‘paid-out' cost.
It is ‘paid-in' cost.
(c)
Examples: Payment of wages, payment of rent, purchases of raw materials.
Examples: rent of the owner occupied building, salary for own labour supplied.

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