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    A firmâ??s costs can be divided into fixed costs and variable costs. Identify each of the following as either a fixed or variable cost. Then, identify that same costs as being an explicit cost or an implicit cost. Give the rationale for each of your answers.

    Labor costs
    Materials costs
    Entrepreneurâ??s profit
    Gasoline used in delivery trucks
    Electricity costs

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    Solution Preview

    Let us understand the basics first:
    Variable costs are those which change with the change in the production. Fixed costs are those which remain constant with the change in production. Mixed costs have both the elements of fixed and variable cost.

    Explicit costs are those ...

    Solution Summary

    This solution assesses the examples as explicit costs or implicit costs.