Concept:Explicit costs are direct, out-of-pocket payments made by a firm to acquire inputs such as raw materials.
Explanation:Expenditure on raw materials is a direct payment to suppliers for materials used in production.
It is an actual monetary payment, so it is not an implicit cost, which involves non-cash opportunity costs like an owner’s time or capital.
It is also not a prime cost by itself; prime cost includes direct materials, direct labour, and direct expenses, but the single item is classified clearly as an explicit cost.
Average cost is total cost divided by output, not a classification of raw material spending.
Therefore, raw materials represent a direct, physical cost that the firm pays externally.
Answer:A. explicit cost