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JAMB Economics 1994 Question 15

Question 15

Theory of Costs and Revenue

A company's expenditure on raw materials is regarded as

  1. A.explicit cost
  2. B.implicit cost
  3. C.prime cost
  4. D.average cost
Show the answer and explanation

Answer: A (explicit cost)

Explanation

Money actually paid out to buy inputs such as raw materials is an explicit cost; implicit costs are the owner's own resources used without payment.