Assertion (A): Explicit costs are payments made to outsiders for inputs.
Reason (R): The owner's own capital used in the business has no cost.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A is true: wages, rent paid and raw materials bought are explicit costs.
R is false: the owner's capital could have earned interest elsewhere; that forgone interest is an implicit cost.

Concept: Explicit and implicit costs
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsFixed and variable cost

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Assertion (A): Explicit costs are payments made to outsiders for inputs.Reason (R): The owner's own capital used in the business has no cost.

Explanation

Assertion (A): Explicit costs are payments made to outsiders for inputs.
Reason (R): The owner's own capital used in the business has no cost.