[This is part of the series: The Complete Guide To Economics 101.]
What are implicit costs?
Implicit Costs are costs that are usually not reported in a formal way.
You can almost think if them as invisible costs.
- A project is begun, so the capital used in it cannot be used elsewhere (opportunity cost).
- A large capital asset depreciates over time. There is no cash expense, but the asset is worth less.
- Or, a mistake is made that hurts the brands integrity.
These are all implicit costs, obviously different from explicit costs.