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Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing.
Sunk cost. In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. [ 1][ 2] Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken. [ 3] In other words, a sunk cost is a sum paid in the ...
Definition. Williamson defines transaction costs as a cost innate in running an economic system of companies, comprising the total costs of making a transaction, including the cost of planning, deciding, changing plans, resolving disputes, and after-sales. [ 6] According to Williamson, the determinants of transaction costs are frequency ...
Economics ( / ˌɛkəˈnɒmɪks, ˌiːkə -/) [ 1][ 2] is a social science that studies the production, distribution, and consumption of goods and services. [ 3][ 4] Economics focuses on the behaviour and interactions of economic agents and how economies work.
Variable costs are costs that change as the quantity of the good or service that a business produces changes. [ 1] Variable costs are the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs are costs that can easily be ...
Economic cost is the combination of losses of any goods that have a value attached to them by any one individual. [ 1][ 2] Economic cost is used mainly by economists as means to compare the prudence of one course of action with that of another. The comparison includes the gains and losses precluded by taking a course of action as well as those ...
The marginal cost can also be calculated by finding the derivative of total cost or variable cost. Either of these derivatives work because the total cost includes variable cost and fixed cost, but fixed cost is a constant with a derivative of 0. The total cost of producing a specific level of output is the cost of all the factors of production.
Opportunity cost, as such, is an economic concept in economic theory which is used to maximise value through better decision-making. In accounting, collecting, processing, and reporting information on activities and events that occur within an organization is referred to as the accounting cycle.