What is the difference between an implicit cost and an explicit cost?

The Explicit costs are the cost factors

production that require a direct cash payment

l! business.

What the! Company has to spend to buy a factor

which it does not have

- The Implicit costs are costs that do not require

direct monetary payment from! business.

What the! Company could have earned by using the factor

producing it already has another use

An implicit cost is a cost that has occurred but it is not initially shown or reported as a separate cost. On the other hand, an explicit cost is one that has occurred and is clearly reported as a separate cost.