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Economics glossary · Firms and competition

Explicit costs

What explicit costs means in economics, as one of the costs and profits an economist counts, with an example and a question to test yourself.

Definition
Explicit costs
Explicit costs are out-of-pocket costs, the actual payments a firm makes, such as the wages it pays its staff or the rent on its premises.
Example

Can you think of an example of explicit costs?

Test yourself

Can you name the two kinds of cost and the two kinds of profit an economist counts?

Learn it properly: the module

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