Question

Identify the correct pair of items from the following Columns I and II:

Column I	Column II
(1) Opportunity Cost	(a) ) The value of a factor in its next worst alternative use.
(2) Explicit Cost	(b) ) The expenses incurred by the producer when the inputs are purchased or hired from the market.
(3) Implicit Cost	(c) The value of a factor in its next best alternative use.
(4) Hidden Cost	(d) The expenses incurred by the producer when the inputs are purchased or hired from the black market.

Options

• 1 - (a)

• 2 - (b)

• 3 - (c)

• 4 - (d)

Answer 1

2 - (b)

Explanation:

Opportunity Cost	Cost of foregone next best alternative.
Explicit Cost	Any expense that has already occurred but is not shown or reported as a separate expense.
Implicit Cost	These are normal business costs that appear in the general ledger and have a direct impact on a company's profitability.
Hidden Cost	Unexpected costs added to the purchase.