which of the following is most likely to be an implicit cost of production?
Which of the following is most likely to be an implicit cost of production?
Answer: Implicit costs are the opportunity costs of using resources that belong to the firm itself, without direct monetary payment. One of the most likely implicit costs of production is “owner’s salary.” The owner of a business could choose to work elsewhere and earn a salary, but decides to work in their own business instead. This foregone salary is considered an implicit cost of production because it represents the income the owner could have earned if they worked for another company. Other examples of implicit costs include the cost of using self-owned resources such as land or equipment, the interest income that could have been earned if the firm’s funds were invested elsewhere, and the depreciation of assets owned by the firm. These costs are important to consider alongside explicit costs when evaluating the total cost of production for a business.