Economic Costs

Economic costs refer to the total expense associated with a decision or action, encompassing both explicit and implicit costs. Explicit costs are direct out-of-pocket expenses, like wages or materials, while implicit costs represent the value of alternatives forgone, such as time or resources that could have been used elsewhere. For example, if you spend money to start a business, your economic cost includes the money spent and the income you could have earned working elsewhere. Understanding economic costs helps in making informed choices by considering not just what is spent, but also the value of what is given up.