This chapter introduces theory of the firm, more specifically costs that a firm incurs. Section 1 introduces explicit and implicit costs. One way to help understand different types of costs is to think of how we, as individuals, experience them in our day-to-day lives. For this discussion, your task is to:

1. Identify an implicit and explicit cost that you regularly face.
2. Explain what options you have with each of your costs.
3. Is it possible for you to increase them? Is it possible for you to decrease them?