Question

Jeb owns a small marketing company, which he operates from a home office. Jeb’s home office is an example of which of the following?

Use letters in alphabetical order to select options

1. A Explicit cost

2. B Marginal cost

3. C Implicit cost

4. D Fixed cost

Answer 1

Marginal cost is the additional cost that is generated by producing one extra additional unit

Additional cost is expressed in terms of total cost

Total cost the sum of fixed cost and variable cost

Variable cost are those cost which increases as the production increases

Fixed cost are those costs which are constant in the short run and do not changes

In the given question since Jeb home office is fixed cost investment because it is the one time cost for short run production

Explicit cost are those cost which are recorded in book value

Implicit cost are those cost which are not recorded in the book value but these are the cost that inccurred by the firms as well and expressed as opportunity cost

But here implicit cost and explicit cost are irrelevant

Hence the correct answer here is option d