implicit cost

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Implicit Cost

The opportunity cost of an activity. Implicit costs are what a company or individual could have earned had a different decision been made. For example, suppose an independent consultant has two clients and she spends some time working on the first client's project. The implicit costs are what the consultant would have made had she worked on the second client's project instead. Implicit costs contrast with explicit costs, which are what someone actually spends on an activity. It is also called an indirect cost.

implicit cost

or

imputed cost

the OPPORTUNITY COST to a FIRM of using resources owned by the firm itself to produce its output. For example, if a firm occupies a building that it owns, it forgoes the opportunity of renting it out for some other use. Thus, implicit costs represent the sacrifice of income that could have been earned by renting out (or selling) the firm's resources to others.

To achieve an accurate measure of the total cost of producing goods or services, the firm must impute a rent to itself using a SHADOW PRICE based upon the current market rates for renting the property See PROFIT, EXPLICIT COST.

implicit cost

or

imputed cost

the OPPORTUNITY COST to a FIRM of using resources owned by the firm itself to produce its output. For example, if a firm occupies a building that it owns, it foregoes the opportunity of renting it out for some other alternative use. Thus, implicit costs represent the sacrifice of income that could have been earned by renting out (or selling) the firm's resources to others.

To achieve an accurate measure of the total cost of producing goods or services, the firm must impute a rent to itself based upon the current market rate for renting the property See PROFIT, EXPLICIT COST, SHADOW PRICE.

References in periodicals archive ?
For the period June-December 2007, Isla incurred the following costs, divided into explicit and implicit costs (see Table 3):
Equation 2 tests the hypothesis that the WTP for a new stadium depends on the following variables: the dollar value of the bid amount (AMOUNT), the respondent's income (INCOME), the extent to which the Vikings are a public good (PUBGOOD), the prestige associated with having a new stadium (PRESTGE), the explicit and implicit costs incurred in the previous seasons by respondents who watch games either at the stadium or on television (SPEND), the belief that a new stadium will help the team win a Super Bowl (WINSUPER), the belief that the team will relocate if not given a new stadium (LEA VE), the Minnesota Twins baseball stadium drive (TWINS), a joint stadium with the University of Minnesota (UOFM), and a vector of demographic variables (Z).
Perceived utility and importance, that is the intrinsic value given to those same tasks by students, as well as perceived implicit costs, that is, the necessary efforts to complete the assignments are some relevant factors when looking at homework through a motivational lens (Warton, 2001).
There are explicit costs of having to produce more reports and implicit costs of compelling management to focus far more attention on regulatory compliance.
Partial and incomplete data on direct measures of costs go together with inference on implicit costs from the pattern of trade across countries.
They have significant organizational, economic, and political components; the economics are particularly treacherous because the environment mixes explicit costs (for example, the costs of searching an international union catalog like OCLC or RLG, or of actually creating and hosting a centralized union catalog somewhere for a group of cooperating institutions) with implicit costs (such as provisioning a set of local systems to participate effectively in a distributed search constellation).
Section 482 cases also consume huge amounts of taxpayer resources both in terms of the explicit costs of litigation and the implicit costs of management time, effort, and distraction.
98 million, the maximum level available to an institution of its asset size, and was evaluating the explicit and implicit costs associated with such a program as well as the benefits for the company, its wholly owned subsidiary, Howard Bank, its shareholders, depositors and the communities which it serves.
The two components of full economic cost alluded to in most opportunity cost discussions-direct cost, and indirect cost of a forgone opportunity-happen to already be well represented by other existing textbook terms, explicit and implicit costs.
1] ITG TCA assesses trading performance and implicit costs under a variety of market conditions, enabling traders and portfolio managers to adjust strategies, reduce costs, boost performance and potentially improve fund rankings.
These implicit costs, also called opportunity costs, include the cost of business owner's savings used in the business instead of being available to earn interest income in an alternative use (for example, if saved as a Certificate of Deposit at a bank); the cost of the business owner's time used to run the business instead of an alternative use (for example, being employed elsewhere); and the cost of using any other resources (for example, land and buildings) supplied by the business owners for use in the business instead of alternative uses (for example, renting them out).