The opportunity cost of the use of productive r... - JAMB Economics 1995 Question

The opportunity cost of using resources a producer already owns, but for which they don't pay an explicit cost, is an implicit cost.

• Implicit costs are the opportunity costs of using resources that the producer already owns. These costs are not reflected in the firm's accounting records.
• Fixed costs are costs that do not vary with the level of output.
• Variable costs are costs that change with the level of output.
• Prime cost is the sum of direct materials and direct labor costs.