Which of the following costs is considered an explicit cost for you?

• A. Foregone salary from choosing to attend college instead of working
• B. The value of leisure time sacrificed to study
• C. Potential interest earned on savings used for tuition
• D. Paying monthly rent for your apartment

Answer: (D)

Verified step by step guidance

1. Understand the difference between explicit and implicit costs: Explicit costs are direct, out-of-pocket payments made for resources or services, while implicit costs represent the opportunity costs of using resources owned by the individual, such as foregone income or time.
2. Identify each option and classify it: Foregone salary is an implicit cost because it represents income you give up by attending college instead of working.
3. The value of leisure time sacrificed is also an implicit cost, as it reflects the opportunity cost of your time spent studying rather than relaxing or engaging in other activities.
4. Potential interest earned on savings used for tuition is an implicit cost because it is the income you forgo by using your own savings instead of investing them.
5. Paying monthly rent for your apartment is an explicit cost because it involves a direct payment of money to a landlord, which is a clear out-of-pocket expense.