Explicit cost

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An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials,[1] as opposed to implicit costs, which are those where no actual payment is made.[2] It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when considering the cost of labour.[2]

Explicit costs are taken into account along with implicit ones when considering economic profit. Accounting profit only takes explicit costs into account.[1]

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References[edit]

  1. ^ a b Carbaugh, Robert J. (January 2006). Contemporary economics: an applications approach. Cengage Learning. p. 94. ISBN 978-0-324-31461-8. Retrieved 3 October 2010. 
  2. ^ a b Lipsey, Richard G. (1975). An introduction to positive economics (fourth ed.). Weidenfeld & Nicolson. pp. 214–7. ISBN 0-297-76899-9.