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JAMB Economics 1995 Question 15

Question 15

Theory of Costs and Revenue

The opportunity cost of the use of productive resources which a producer owns and so does not pay for constitutes

  1. A.a fixed cost
  2. B.an implicit cost
  3. C.a variable cost
  4. D.a prime cost.
Show the answer and explanation

Answer: B (an implicit cost)

Explanation

Implicit costs are the earnings a producer gives up by using his own resources (such as his own building or time) instead of hiring them out.