Question

A producer starts the business in his own building. The imputed rent of this building will be considered as ______.

Options

• explicit cost

• opportunity cost

• implicit cost

• variable cost

Answer 1

A producer starts the business in his own building. The imputed rent of this building will be considered as implicit cost.

Explanation:

The producer makes no direct payment for using his own building, so its estimated rental value is an implicit cost. It represents income forgone by not renting the building to someone else.