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Simple English definitions for legal terms
implicit cost
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A quick definition of implicit cost:
An implicit cost is the cost of not choosing an alternative option. For example, if you choose to go to college, the implicit cost is the money you could have earned if you had worked instead. It is not a cost that you pay directly, but it is still a cost that you have to consider when making a decision.
A more thorough explanation:
Implicit cost is the cost of not choosing the next best alternative when making a decision. It is the opportunity cost of choosing one option over another. For example, if a person decides to start their own business instead of taking a job, the implicit cost is the salary they would have earned if they had taken the job.
Another example of implicit cost is when a company decides to use its own resources to produce a product instead of outsourcing it. The implicit cost is the profit they could have made if they had used those resources to produce a different product or service.
Implicit cost is important to consider when making decisions because it helps to determine the true cost of a choice. It is not always easy to calculate, but it is important to take into account when making important decisions.