Question

A producer starts the business in the building owned by him and borrows money for running it. The Imputed rent of own building is ______

Options

• Explicit costs

• Implicit costs

• Opportunity costs

• Variable cost

Answer 1

A producer starts the business in the building owned by him and borrows money for running it. The Imputed rent of own building is Implicit costs.

Explanation:

When a producer starts a business in a building he owns, rather than hiring a building from outside, he rents out his own land, hence the implicit cost is the imputed rent of his own building.