Distinction Between Economist’s And Accountant’s View of Cost - SS2 Economics Past Questions and Answers - page 1
What is the focus of the economist's view of cost?
Actual cash outflows
Opportunity cost
What is the focus of the accountant's view of cost?
Opportunity cost
Actual cash outflows
Which type of cost is included in both economist's and accountant's views of cost?
Explicit costs
Implicit costs
Which type of cost is only included in the economist's view of cost?
Explicit costs
Implicit costs
What is the difference between explicit and implicit costs?
Explicit costs are actual cash outflows, while implicit costs are opportunity costs associated with the next best alternative forgone.
Why do economists include implicit costs in their view of cost?
Economists include implicit costs to account for the opportunity cost of a decision, which is the value of the next best alternative forgone. This helps economists make more accurate decisions by considering all costs associated with a decision.