Alternative costs are the costs that would apply if an alternative set of assumptions were adopted, and they represent the benefits foregone when a second-ranked alternative is compared to the chosen alternative.
The expenditure on goods and services required to carry out the operations of an organization. Different methods of defining cost are used in accounting to reflect various aspects of financial reporting and decision making.
The rate of return that a company's shareholders expect for holding stock in that company, used as part of the calculation of the total cost of capital for a firm. It represents the opportunity cost to investors of holding shares. The cost can be calculated by a formula dividing dividends per share by the current market value and adding the dividend growth rate.
Economic efficiency refers to the optimal allocation of resources where they are most valued and the production and distribution of goods and services occurs at the lowest possible cost. It ensures that no further improvements can be made in one person's well-being without making someone else worse off.
Implicit cost elements refer to the costs associated with missed opportunities in the utilization of a company's resources. These costs are not directly compensated through cash transactions but reflect the opportunity cost of applied resources.
Imputed value, or imputed income, refers to a logical or implicit value that is not recorded in any account. This involves assigning a value to goods, services, or investments that are not explicitly quantified.
Opportunity cost is the economic cost of an action measured in terms of the benefit foregone by not choosing the next best alternative. It plays a critical role in decision-making by considering the returns that could have been earned through alternative investments or actions.
A graphical representation that shows the various combinations of outputs that an economy can produce given the available resources and technology.
A graphic representation of various possible outputs of two goods with a fixed supply of resources that are fully employed. Also called a transformation curve, it is useful for determining possible product mixes.
The shadow price represents the change in the optimal value of the objective function for a linear programming problem per unit increase in the right-hand side of a constraint.
