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CARDINAL: A measurement based on a scale or quantitative numbers, such as 1, 5, or 357.2, that enables a comparison in magnitude. Comparability means, for example, that the difference between 5 and 2 is the same as the difference between 12 and 9. Measures such as height and weight use cardinal numbers. Most economic measures are based on cardinal numbers, including gross domestic product, unemployment rate, the price of chocolate, and the quantity of wheat produced. The benefit of cardinal measurement is the ability to directly compare one measure with another. If, for example, the price of chocolate is $1 a pound and the price of wheat is $4 a pound, then wheat is four times more expensive than chocolate. Ordinal measures, which involve relative ranking, is an alternative type of measure.
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                           COST: An alternative term for economic or opportunity cost, which is the highest valued alternative foregone in the pursuit of an activity. Opportunity cost is one of the most fundamental concepts used in the study of economics, hence when the term cost is used in the study of economics without modification, it usually means economic or opportunity cost. Because economists like to economize on effort, the succinct term cost is also frequently used in lieu of opportunity cost or economic cost. In fact, whenever the term cost is used in economics, absent of any modifiers, it inevitably means economic or opportunity cost.Starting With ScarcityThe ultimate source of cost is the pervasive problem of scarcity (unlimited wants and needs, but limited resources). Whenever limited resources are used to satisfy one want or need, an unlimited number of other wants and needs remain unsatisfied. Hence pursuing one activity means alternatives are not pursued. Herein lies the essence of cost. Doing one thing prevents doing another.Cost Plus...There are a seemingly endless number of modifiers that can be used with the term cost. Here is a lengthy, but necessarily incomplete list.- Accounting Cost: An actual outlay or expense incurred in production that shows up a firm's accounting statements or records, which may or may not be an opportunity cost.
- Average Cost: The opportunity cost incurred per unit in the production of a good, calculated by dividing the total cost of production by the quantity of output produced
- Explicit Cost: An opportunity cost that involves a money payment and usually a market transaction.
- External Cost: An opportunity that is not included in the market price of a good because it is not included in the supply price.
- Fixed Cost: An opportunity that does not change with changes in the quantity of output produced.
- Historical Cost: An accounting principle stating that expenses are recorded in terms of original or acquisition cost, which may or may not reflect opportunity cost or current market value.
- Implicit Cost: An opportunity cost that does NOT involve a money payment or a market transaction.
- Marginal Cost: The change in total opportunity cost resulting from a change in the quantity of output produced by a firm in the short run.
- Production Cost: The opportunity cost of using labor, capital, land, and entrepreneurship in the production of goods and services.
- Total Cost: The opportunity cost incurred by all of the factors of production used by a firm to produce a good or service, including wages paid to labor, rent paid for the land, interest paid to capital owners, and a normal profit paid to entrepreneurs.
- Variable Cost: An opportunity cost that changes with changes in the quantity of output produced.
This is a modest list at best. Other terms contain the word "cost" include average variable cost, total variable cost, average fixed cost, total fixed cost, total factor cost, average factor cost, and marginal factor cost. Other "cost" terms pop up in the study of economics as attention is directed to specific topics and issues.
Recommended Citation:COST, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: April 23, 2025].
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RED AGGRESSERINE
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Today, you are likely to spend a great deal of time flipping through mail order catalogs hoping to buy either a T-shirt commemorating the first day of spring or a coffee cup commemorating last Friday (you know why). Be on the lookout for a thesaurus filled with typos.
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In 1914, Ford paid workers who were age 22 or older $5 per day -- double the average wage offered by other car factories.
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"The past cannot be changed. The future is yet in your power. " -- Hugh White, U.S. Senator
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Foreign Exchange
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