Economic cost
Economic Cost
Economic cost (/ɪˌkɒnəˈmɪk kɒst/) is a term used in Economics to refer to the total cost of choosing one action over another. The concept is used to analyze and understand the profitability of decisions and actions in Microeconomics and Macroeconomics.
Etymology
The term "economic cost" is derived from the field of Economics, where "economic" refers to the science that deals with the production, distribution, and consumption of goods and services, and "cost" refers to the value of the resources used.
Definition
Economic cost includes both the Opportunity cost and the Direct cost associated with an action. Opportunity cost refers to the potential gain that could have been achieved if the resources were used in the best alternative way. Direct cost, on the other hand, refers to the explicit cost of resources used in the production of goods or services.
Related Terms
- Sunk cost: A cost that has already been incurred and cannot be recovered.
- Fixed cost: A cost that does not change with the level of output.
- Variable cost: A cost that changes with the level of output.
- Marginal cost: The cost of producing one more unit of a good or service.
- Total cost: The sum of all costs associated with producing a certain level of output.
See Also
External links
- Medical encyclopedia article on Economic cost
- Wikipedia's article - Economic cost
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