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The Explicit costs are the cost factors
production that require a direct cash payment
l! business.
What the! Company has to spend to buy a factor
which it does not have
- The Implicit costs are costs that do not require
direct monetary payment from! business.
What the! Company could have earned by using the factor
producing it already has another use
An implicit cost is a cost that has occurred but it is not initially shown or reported as a separate cost. On the other hand, an explicit cost is one that has occurred and is clearly reported as a separate cost.
