Talk:Implicit cost

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[edit] IMPLICIT COST

Implicit cost is the imputed or estimated values of factors of production that is owned by the enterprises or buisness organisation and used in their own production process for production of commodities. There are mainly four factors of production;land,labour,capital and entrepreneurship accordingly factor incomes are rent,interst,wages and profits.If a firm hires these various factors of production it has to pay rent for hire of land,price for capital,wages to labour and a part of profit to the entreprenuers for managing the buisness.Now suppose an entrepenur owns land , have invested his own capital and gives valuable managerial services for the upliftment of the firm. Accordingly he should get rent,interst and profits. A firm utilising its own resources dosen't actually pay to itself for utilising those resources.But from economic perspective cost of such resources should be calculated for correct valuation of economic cost because all reources has oppurtunity cost which it has to take in to consideration. (edited by Zeeshan Tarafdar) —Preceding unsigned comment added by 221.135.209.246 (talk • contribs) July 8, 2006