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are implicit and explicit cost same as fixed and variable cost. Explain in detail

are implicit and explicit cost same as fixed and variable cost. Explain in detail

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Answer #1

Fixed Cost is the cost which does not vary with the changes in the quantity of production units or level of output . Variable Cost is the cost which varies with the changes in the number of production units .

While implicit and explicit costs are totally different concept . Explicit costs are out-of-pocket costs for a firm or costs that show in accounts for example, wages and salaries, rent, or materials . On the other hand , implicit costs are the opportunity cost of resources already owned by the firm and used for business purpose , opportunity cost is next best alternative forgone , for example, some money which could have earned interest in bank is used to expand business . This implicit cost is used to calculate economic costs .

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