Implicit Costs

Implicit costs are the opportunity costs associated with a decision, representing the value of the alternatives you give up when you choose one option over another. For instance, if you use your own funds to start a business, the implicit cost includes the interest you could have earned had you invested that money elsewhere. In cost-benefit analysis, implicit costs help evaluate the true economic impact of a choice by considering not just direct expenses but also what you sacrifice in terms of time, resources, and opportunities when pursuing one path instead of another.