ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Economic cost is the combination of losses of any goods that have a value attached to them by any one individual. Economic cost is used mainly by economists as means to compare the prudence of one course of action with that of another.

Detailed explanation-2: -Economic cost includes opportunity cost when analyzing economic decisions. An example of economic cost would be the cost of attending college. The accounting cost includes all charges such as tuition, books, food, housing, and other expenditures.

Detailed explanation-3: -Economic cost = Explicit cost + Implicit cost. Explicit and implicit cost is the main difference between accounting cost and economic cost. While economic cost takes into account explicit and implicit costs, accounting cost only considers actual expenses and capital depreciation.

Detailed explanation-4: -What are economic costs? Economic costs include accounting costs and implicit costs, which are hypothetical expenses used when making a business decision to forecast potential profit. This means that economic costs include both explicit and implicit costs.

Detailed explanation-5: -In order to understand the general concept of costs, it is important to know the following types of costs: Accounting costs and Economic costs. Outlay costs and Opportunity costs. Direct/Traceable costs and Indirect/Untraceable costs.