Q.State whether each of the following is an Explicit Cost or an Implicit Cost for a self-employed doctor who runs her own clinic in her own building:

An item is explicit only if actual money is paid out to an outsider; it is implicit if it is a self-owned resource's value with no direct payment made.

1. Receptionist's salary — Explicit cost. The doctor makes an actual money payment to an outside person (the receptionist) for a hired service; this is a genuine cash outflow that would appear in her accounts.
2. Rent forgone on her own building — Implicit cost. No money changes hands here at all — the doctor simply chooses to use her own building for her clinic instead of renting it out to someone else. The value of what she gives up (the rent she could have earned) is the implicit cost of using her own premises.
3. Medicines and consumables — Explicit cost. These are actual purchases from outside suppliers, involving real money payments, exactly like wages or raw material costs in any other business. …

A common mistake is to classify (ii) and (iv) as 'not a cost at all,' reasoning that since no money is actually paid, there is no cost — this ignores the whole idea of opportunity cost, which is exactly …