Which cost is included in economic cost but not usually in accounting cost?
Correct answer: D. Income forgone by the owner's resources
- A. Wages paid to employees
- B. Rent paid to a landlord
- C. Electricity purchased by the firm
- D. Income forgone by the owner's resources
Explanation
Economic cost includes both explicit payments and implicit opportunity costs. The income forgone from using the owner's time, building or capital is an implicit cost and is normally excluded from accounting cost.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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