alleryStart learning →Out-of-pocket costs, meaning actual payments a firm makes, are called:
AExplicit costs
BImplicit costs
CMarginal costs
DAverage costs
Answer & Solution
Correct answer: A. Explicit costs
1. A firm gives up two different kinds of thing when it produces.
2. Explicit costs are out-of-pocket costs, that is, actual payments.
3. Wages paid and rent handed over are examples.
4. Implicit costs are more subtle, but just as important.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 7 'Production, Costs and Industry Structure', sections 7.1-7.4_
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