Ignoring+Implicit+Costs

  **__Ignoring Implicit Costs__** Implicit cost are the hidden costs of doing something that aren't explicit or obvious. One does not actually pay implicit costs and they are not easily accounted for, it is essentially the cost of lost opportunity of not doing an alternate activity. These implicit costs can be, but are not limited to time, effort and even happiness. Ignoring these hidden costs is a mistake because by not factoring in all of the costs into a decision making process, you will make a decision without all the information, and it may not be in your best interest. A common example of people ignoring implicit is when going to college. Most if not all college students only think about paying college tuition and housing costs, which are only explicit costs. They completely ignore the implicit cost of attending college, for instance the implicit cost of them not working a job while they go to school. Ignoring these costs in many cases make college even more costly than most will expect.

**Example of Implicit Costs:** Pictured above are college students who ignore the implicit costs of attending college. media type="youtube" key="ydVp-2B8qlw&hl=en&fs=1" height="344" width="425" This video shows the implicit costs for Chris to go to private school, which is not just tuition (explicit cost) but also energy and time from the rest of the family who have to work two jobs.

**These are some links to better help you understand implicit costs:** [|Implicit Costs on Wikipedia] [|Investopedia Definiteion of Implicit Costs] [|Explicit vs. Implicit Costs]

**Test your knowledge:** Which of the following is not an implicit cost for going to the movies? A. Cost of not spending time with friends B. Cost of gas for driving to the movies C. Cost of not spending time on homework D. Cost of tickets to watch the movie E. Cost of happiness from not enjoying the movie

[|Answer]