\begin{tabular}{l} 3) Interest is considered a(n) __A explicit cost when the firm pays a bank to borrow money. \\ OB) implicit cost when the firm owner uses his or her own funds to \\ buy capital. \\ OC) Both answers A and B are true. \\ OD) More information is needed. \\ \hline\end{tabular}

To solve this problem, we need to understand the concepts of explicit and implicit costs in economics. 1. **Explicit Costs**: These are direct, out-of-pocket payments for expenses. For example, if a firm pays interest to a bank for borrowing money, this is an explicit cost because it involves a direct payment. 2. **Implicit Costs**: These represent the opportunity costs of using resources that the firm already owns. For instance, if a firm owner uses their own funds to buy capital instead of investing that money elsewhere, the foregone earnings from that alternative investment are considered an implicit cost. Now, let's analyze the options: - **A)** Interest is considered an explicit cost when the firm pays a bank to borrow money. (True) - **B)** Interest is considered an implicit cost when the firm owner uses his or her own funds to buy capital. (True) - **C)** Both answers A and B are true. (True) - **D)** More information is needed. (False) Since both statements A and B are true, the correct answer is: **C) Both answers A and B are true.**