Chapter7 - EconomicsChapter7MakingDecisions 18:49:00...

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Economics Chapter 7 Making Decisions          30/09/2007 18:49:00 Costs     “Either Or” Explicit Costs:  A cost that involves actually laying out money. Implicit Cost:  A cost that does not require an outlay of money; it is measured  by the value, in dollar terms, of the benefits that are foregone.  Accounting Profit:  The business’s revenue minus the explicit cost and  depreciation. Economic Profit:  The business’s revenue minus the opportunity cost of its  resources.  It is usually less than the accounting profit. Capital:  The value of a business’s assets, equipment, buildings, tools,  inventory, and financial assets. Implicit cost of capital:  The opportunity cost of the capital used by a  business, the income the owner could have realized from that capital if it had  been used in its next best alternative way. Decisions
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Chapter7 - EconomicsChapter7MakingDecisions 18:49:00...

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