A Comprehensive Overview: Concepts of Cost and Its Functions

Mr. Yelahanka Lokesh

Abstract

Cost ideas and their associated functions are essential to understanding economics because they offer important insights into resource allocation, pricing tactics, and firm profitability. The basic ideas surrounding cost and its roles in economics are examined in this chapter. In economics, the term cost refers to the value or hardship associated with the production or acquisition of commodities and services. Both explicit costs, which are quantifiable out-of-pocket charges, and implicit costs, which are the opportunity costs of other resource uses, are included in it. Total cost is the sum of all costs, both explicit and implicit, both fixed and variable costs included.