{"id":7,"date":"2016-08-18T09:08:45","date_gmt":"2016-08-18T16:08:45","guid":{"rendered":"http:\/\/pages.palomar.edu\/jesteban\/?page_id=7"},"modified":"2016-12-06T12:00:14","modified_gmt":"2016-12-06T20:00:14","slug":"7-2","status":"publish","type":"page","link":"https:\/\/pages.palomar.edu\/jesteban\/7-2\/","title":{"rendered":"Lesson 1 Total Cost Tutorial"},"content":{"rendered":"
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Lesson 1<\/h1>\n

A very important concept to begin with, the difference between explicit<\/b> cost and implicit<\/b> cost.\u00a0 Explicit<\/b> costs are visible costs that are commonly used in our daily lives such as rent, salaries, etc.\u00a0 There is an actual payment that takes place, these are the costs that accountants use in their books.\u00a0 Economists add implicit <\/b>costs to this list, the opportunity costs.\u00a0 These are costs that are not as evident, for example if a student gives up a salary of $10,000 per year to start a business the student has to consider the salary as an implicit cost.\u00a0 In general any opportunity cost should be considered an implicit cost.\u00a0 The sum of implicit<\/b> and explicit <\/b>cost gives economists the total cost of production<\/b>.\u00a0 By definition this cost will be higher than what accountants would reflect.\u00a0 (Accountants are not as clever as economists!\u00a0 :).<\/p>\n