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Economics 101: Implicit Costs | SterlingTerrell.net

Economics 101: Implicit Costs


What are implicit costs?

Implicit Costs are costs that are usually not reported in a formal way.

You can almost think if them as invisible costs.
  • A project is begun, so the capital used in it cannot be used elsewhere (opportunity cost).
  • A large capital asset depreciates over time. There is no cash expense, but the asset is worth less.
  • Or, a mistake is made that hurts the brands integrity. 
These are all implicit costs, obviously different from explicit costs.