The implicit cost of capital is:A) the expense associated with leasing machines.B) the expense associated with buying machines.C) the opportunity cost of capital used by a business.D) irrelevant for determining economic profit.

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Varun Ratakonda · Accepted Answer

Final Answer : C, Explanation :  The implicit cost of capital is the opportunity cost of using capital in a certain way, such as investing in a particular project or business. It represents the return that could have been earned if the capital had been invested elsewhere. Thus, it is a relevant cost in determining economic profit as it reflects the true cost of using the capital. A and B are incorrect because they refer to explicit costs of using capital rather than the opportunity cost. D is incorrect because the implicit cost of capital is important in determining economic profit.

The implicit cost of capital is:

A) the expense associated with leasing machines.
B) the expense associated with buying machines.
C) the opportunity cost of capital used by a business.
D) irrelevant for determining economic profit.

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