Which of the following are implicit costs?

• A. Utility bills
• B. Owners' labor
• C. Rent
• D. Employee wages

Answer: (B)

This question tests the distinction between implicit and explicit costs. Implicit costs are the value of resources used in the business that don’t involve a direct cash payment—the opportunity cost of using those resources. The owner’s labor is an implicit cost because the time the owner spends working for the business could be spent earning wages elsewhere, so there’s a foregone salary. In contrast, utility bills, rent, and employee wages require actual cash outlays, so they are explicit costs. Thus, the implicit cost among the options is the owner’s labor.