Cost

Definition

Cost refers to all expenses incurred in producing goods or services. It includes both explicit costs (e.g., wages, materials) and implicit costs (e.g., opportunity cost).

Related terms

Fixed Costs: Fixed costs are expenses that do not change regardless of production level, such as rent for a factory space.

Variable Costs: Variable costs are expenses that change based on production level, such as raw materials needed to make products.

Total Cost Curve: The total cost curve shows how total cost changes as output increases. It typically has an upward slope due to diminishing returns.