In the above example, interest paid on borrowed money will be explicit cost, whereas, the imputed rent of the shop premises is implicit cost.
Explicit cost:These are those cash payments, which firms make to outsiders for their services and goods, e.g. wages, payment for raw material, rent, interest, etc.
Implicit cost : These are the costs of self-owned and self-employed resources, e.g. entrepreneur may utilise his own building for factory use, interest on self-capital, etc.