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In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns and thus does not pay rent. It is the opposite of an explicit cost, which is borne directly. [1]
Implicit costs (also referred to as implied, imputed or notional costs) are the opportunity costs of utilising resources owned by the firm that could be used for other purposes. These costs are often hidden to the naked eye and are not made known. [8] Unlike explicit costs, implicit opportunity costs correspond to intangibles.
An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, [1] as opposed to implicit costs, where no actual payment is made. [2] It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when ...
The accurate measurement of each of these costs is necessary to facilitate decision management. For example, if the combination of explicit and implicit costs, which represent the realized cost of transacting, is greater than the opportunity cost of not transacting, it suggests that trades may have been executed too quickly.
It is different from accounting profit, which only relates to the explicit costs that appear on a firm's financial statements. An accountant measures the firm's accounting profit as the firm's total revenue minus only the firm's explicit costs. An economist includes all costs, both explicit and implicit costs, when analyzing a firm. Therefore ...
I mean, we do factor in recapture into our value, but the reality is that recapture, whether it's implicit in -- or explicit in the model or implied because of the discount rate is in everybody's ...
Assumption-based planning in project management is a post-planning method that helps companies to deal with uncertainty. It is used to identify the most important assumptions in a company's business plans , to test these assumptions, and to accommodate unexpected outcomes.
Implicit and explicit memory are both kinds of long-term memory, but what’s the difference, and why is each important? Experts explain. This Is the Main Difference Between Implicit and Explicit ...