Principles of microeconomics--- Much of economics is focused on defining costs a

Question

Principles of microeconomics---

Much of economics is focused on defining costs and distinguishing between implicit and explicit costs. Considering this please respond to the following:

Think of a company, and its industry, and give an example of an implicit cost for that company.

With the implicit cost identified explain why, or why not, the cost needs to be considered.

Are there any benefits to the cost identified? Are there any disadvantages? Explain.

If necessary, complete additional research to support your ideas on this topic.

Explanation / Answer

Apple founded by Steve Jobs started in 1976 possess land worth of $34400000 on which it has set up its business. The lost revenue from not renting out this land is the implicit cost.

Implicit cost is the opportunity cost of the company's internal resources which are used in business without any explicit compensation or payment. It need not to be considered in decision making because it is not paid out explicitly and money is not changing hands. It represents the loss of only potential income and not the actual loss of profits.

Benefits - Helps in calculating economic profit only.

Disadvantage - Cannot be calculated precisely.

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