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A difference between explicit and implicit costs is that a. explicit costs must be greater than implicit costs. b. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do. c. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. d. implicit costs must be greater than explicit costs.

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Answer:

The answer is B.

Explanation:

Implicit cost is an opportunity cost. The cost of an action that was not taken. For example, A firm decided to use its plant and machinery instead of renting it out. The cost attached to the renting out is an implicit cost. Implicit therefore, do not require a direct monetary outlay by the firm.

Explicit cost is the accounting cost. They are directly related to the production of goods and services. For example, the cost of direct materials, direct labor etc.

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