237. Implicit and explicit cost

Explicit costs are the costs that accountants would use to calculate costs – these are the rand values that are incurred in the production of goods and services. Implicit costs would ALSO include the intangible costs such as opportunity cost. Opportunity cost is the opportunity that is lost fin not pursuing that alternative. An implicit cost, also called 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 that could have been used in an alternate way. It is the next best opportunity foregone. It is different to explicit cost, which is borne directly and has an objective value and can be expressed in monetary terms. Implicit costs cannot. Explicit costs are also called Accounting Cost.