Indicate whether each of the following is an explicit cost or an implicit cost. a, Amanager’s salary b, Payments to Dell for computers c. A salary forgone by the owner of a firm by operating his or her own company d. Interest forgone on a loan an owner makes to his or her own company e, Medical insurance payments a company makes for its employees £. Income forgone while going to college Explanation a Manager’s salary is an explicit cost because salary is a direct cost thatis involved in the process of running a business. Explanation Payment to Dell for computers is an explicit cost because this cost involves in spending money.Explanation a Salary forgone by the owner of a firm by operating his or her own. company is an implicit cost because the person gives up his work in order to start his own business. Since the salary is given up for benefit, it is an implicit cost. Concept a Implicit costs: Implicit cost refers to the costs that have previously beea incurred but are not initially shown as 2 separate expenditure. Itdenotes an opportunity cost that arises when a firm allocates internal resources. Explanation a Interest forgone on a loan that an owner makes to his or her own company is an implicit cost because the person would earn the interest payment ifhe lent the amount outside the business. Thus, he has given up his interest rate.Explanation a Medical insurance payment that a company makes for its employees is an explicit cost because it involves spending the money directly. if Explanation Income forgone while going to college is an implicit cost because the person has given up his income for going to college. Thus, there isa fall in the opportunity cost.