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A producer starts a business by investing his own savings. He employs a manager to look after the business. Identify the explicit and implicit costs from this information. Explain. |
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Answer» Imputed interest of owner's self owned savings is implicit cost because implicit costs are incurred on the use of self-owned inputs' Salary paid to manager to look after the business is explicit cost because it is the expense incurred by the producer for hiring the services of the manager from the market. |
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