Which of the following is an implicit cost of owning and operating a farm?multiple choicethe money a farmer could earn by working for someone elsethe money paid for repairing a tractorthe money received for crops grown during the growing seasonthe money paid for fertilizer each growing season
Question
Which of the following is an implicit cost of owning and operating a farm?multiple choicethe money a farmer could earn by working for someone elsethe money paid for repairing a tractorthe money received for crops grown during the growing seasonthe money paid for fertilizer each growing season
Solution
The implicit cost of owning and operating a farm from the options given is "the money a farmer could earn by working for someone else".
Here's why:
Implicit costs, also known as opportunity costs, are the costs of resources already owned, for which no monetary payment is made. In this case, the farmer's time is a resource. If the farmer wasn't spending time operating the farm, they could be earning money working for someone else. This foregone wage is an implicit cost of running the farm.
The other options listed - money paid for repairing a tractor, money received for crops grown during the growing season, and money paid for fertilizer each growing season - are all explicit costs, which involve direct monetary payment.
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