What Is an Implied Cost?
Implied cost refers to the total price of those factors of production that are owned by the enterprise and are used in the production process of the enterprise relative to the explicit cost.
Implied cost
Right!
- Chinese name
- Implied cost
- Foreign name
- Implicit cost
- Definition
- Relative to explicit cost
- Main body
- enterprise
- Implied cost refers to the total price of those factors of production that are owned by the enterprise and are used in the production process of the enterprise relative to the explicit cost.
- For example, in the production process, enterprises not only hire workers, take loans from banks, but sometimes also use their own land and funds, and personally manage the enterprise. When companies use their own elements, they also have to pay themselves interest, geographic interest, and salary. So this value should also be included in the cost. Since this type of cost is not as obvious as the explicit cost, it is called an implicit cost. The hidden cost must also be paid from the perspective of opportunity cost according to the highest income that the company's own production factors can obtain in other uses, otherwise, the manufacturer will transfer its own factors out of the enterprise to obtain higher returns.