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Unformatted text preview: In the case of non-monetary costs, the distinction is sometimes less clear. In the
case of the airport noise, the discomfort is an explicit cost; it is felt every time a
plane flies overhead. An implicit cost of the noise might be the inability to enjoy a
backyard barbecue with friends.
To some extent, the distinction between implicit and explicit costs is not
important from an economic perspective; they are all opportunity costs. The noise
takes away the opportunity to have peace and quiet, and the opportunity to enjoy
the backyard with friends. The distinction is made simply to reinforce the fact that
not all costs are obvious, as most explicit costs are. The non-obvious implicit
costs are just as important. 9.
The city foregoes $75,000 from the construction firm if it leases the land to the
transportation firm so its cost cannot be lower than $75,000. However, it could be
higher. In particular, if the cost of remediating the soil is not too high then its next
best option (relative to leasing to the transportation firm) might be to remediate
and use the land for housing or some other activity. 1...
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This document was uploaded on 03/03/2014.
- Spring '14