Explicit Costs
An explicit cost is a cost or expence that is easily calculated or valued. Some examples are wages, rent and the cost of materials. They are usually calculated in currency, as opposed to opportunity cost or implicit costs, which can be calculated in multiple different ways, such as safety or time. Explicit costs are lost directly and subtracted out of total profit, since they are valued in monetary form. They can also be described as the costs that one must pay out of their own pocket.

Explicit costs make up a part of total cost, which is equal to explicit costs + implicit costs. Explicit costs have a direct affect on one's flow of revenue, whereas implicit is intangible, and has no direct affect on revenue.

used-cars.jpg

The explicit cost of buying a car would be the upfront cost of actually buying the car. The implicit costs would be the opportunity cost of what you could have bought with your money, less room in garage, your effect on the environment, and many other problems.



Rent is an example of an explicit cost. the cost of the pain of his abuse would be implicit.

Links:
http://en.wikipedia.org/wiki/Explicit_cost
http://www.businessdictionary.com/definition/explicit-cost.html
http://www.blurtit.com/q258456.html

Question:
What would have a smaller explicit cost, a new computer, or a used computer or a computer you found in the trash?

Answer:
The computer you found in the trash, because you didn't have to pay for it.