Openstax Economics: Examples Of Implicit Costs

In 2015, the pharmaceutical industry spent over 27 billion dollars on advertising. The two greatest components of this effort were promotional advertising and free medication sampling, which the pharmaceuticals invested 15.5 and 5.7 billion dollars respectively (“Persuading the Prescribers”). Promotional advertising involves direct contact with health professionals, the most common being extravagant lunch conferences held for physicians and their staff. On the other hand, sampling involves distributing free sample of medications to physicians, who then have a choice of providing these samples to patients. As a result of these methods, the industry has seen revenue around $400 billion with 90% of physicians having a relationship with a drug company (Campbell 2007). Moreover, the prices of prescriptions continue to rise; a copay of a generic drug is $11.72, preferred brand drug is $36.37 and a specialty drug is $58.37 (Coleman and Geneson 2014). Although the profits are immense in the numbers demonstrated above, it is no surprise when pharmaceutical drug companies elevate their prices even more. For instance, recently Turing Pharmaceuticals raised the price of their medication Daraprim from $13.50 to $750. Keep in mind, this medication is used for threatening parasitic infections, aids, and cancer with alternative options currently found to be inefficient (Pollack 2015). Another example of this practice involves cycloserine, a drug used to

* Implicit—This cost is implicit since it is not money out of the company’s pocket, but it is not applicable since the cost is not relevant.

One of the major pieces to becoming a successful business man/woman is receiving a college education. A college degree is viewed as a necessity and is slowly becoming an unreachable goal for some people. Most believe that the cost of college has been rising and continues to rise, and that the rate of increase is outpacing that of other costs (NAICU). As the cost of college rises, families have to change their way of life to be fortunate enough to send their children to college. Along with changing how families’ live, many other problems are produced in various ways. The cost of college should be lowered because it imposes a burden on parents and their children, causes some students to alter their choice of which college to attend, and

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting:

Looking back on my childhood, I realized a myriad of moments I wouldn't have given a second glance at that age. My thoughts usually tend to gravitate towards my grandparents, both of which were extremely smart, and whether it came to money, clothes, toys, or any other household object, they always put it to multiple uses. On one hand, I believed they were hoarders, but now that I'm able to look back on it, I realize that they caught the very end of the Great Depression, and that they were doing everything in their power to not relive those times. On the other hand, not everyone in my family has made smart decisions with money, so that large amount of advice accumulated over time..

In economics, costs can be defined as the price paid to acquire, produce, accomplish, or maintain anything. (Dictionary.reference.com, retrieved 4/6/09). Cost can be the amount paid or required in payment

As defined by the OMB (2004), “Indirect costs are those incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved” (p. 11). The costs in question include international conference, employee recreational activities and counseling services, investment counsel, lobbying, depreciation, and insurance. Despite seemingly

Inherently, in all businesses there is overhead costs or non-direct costs. If management wants to know the true cost

In regards to Heathers BAI and BDI assessments, she does not need psychological counseling or assistances. Although, in regards NEO-PI-R, ways to cope with high urges and cravings are finding what “triggers” her cravings. When the trigger is found, it would be helpful to exercise this coping method.

Right now in our society a college education is no longer an option or privilege, but rather a necessity. We were practically raised and conditioned to believe that we need a higher education in order to succeed in life. As opposed to generations of the past, high school students today are unable to obtain the number of high paying jobs that were once available. In the post War 1 era, the city of New York provided a free quality college education to many working class people (including immigrants) at the time when they were effectively barred from attending most colleges. Harvard College was founded in 1636, the history of higher education has been closely intertwined with the history of the United States economically, socially, and culturally. Both have generally been associated with expanding opportunity but as college and

unit, two types of costs are distinguished. Firstly the direct costs, consisting of the direct

Parts of opportunity cost are explicit costly (money spent along the project to make it happen, for the task to be done perfectly money and labor need to be involved, e.g. Boss paid workers for their project, students pay tuition to enroll in class and all other amenities involved.) and implicit cost (one’s time value or origin in the next best alternative. The time incorporated in order to run out the next best option).

A direct cost can be traced to a product or service which includes: Direct labor- which is the cost of the labor that’s directly connected to a product or services. Direct labor is sometimes called touch labor, since direct labor workers typically touch the product while it is being made.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 39-40) An example of direct labor is an assembly line worker. Labor cost that cannot be physically traced to the creation of products, or that can be traced only at great cost and inconvenience, are considered to be indirect labot.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 40) Direct material are those materials that become an integral part of the finished product and whose cost can be traced to the finished product.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p39-40) Manufacturing overhead is the third element so manufacturing cost, it includes all costs of manufacturing except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. Only cost associated with operating the factory are consider to be manufacturing overhead cost. A company also incurs other costs associated with its selling administive functions, but these costs are not included as part of manufacturing overhead. Only those

In general, cost means the amount of expenditure (actual or notional) incurred on, or attributable to a given thing.

Direct costs are costs directly related to producing the products and services of a project. On the other hand, indirect costs are costs not directly related to a project’s products or services, but are indirectly related to performing the project.