Question

1. A hospital decides to use its resources to refurbish and expand the emergency room, what is the economic cost of this action?

Answer 1

Ans) Explicit costs are the direct payments made. While implicit cost are basically the opportunity cost.

Economic cost includes both explicit cost and implicit cost.

Explicit cost of expanding the emergency room is the cost of labour which will be employed, cost of materials required to build the room, cost of medical equipments needed for bigger emergency room, cost of electronic appliances like ac etc.

Implicit cost will be the lost opportunity of making private wards, laboratories, large cafeteria, other rooms like bigger doctors room etc.