About This Chapter
Costs in Economics - Chapter Summary
Our chapter materials offer you a quality resource to both learn and review the various types of costs in economics. You'll explore long and short-run, implicit, sunk, and opportunity costs. Our lessons are short in duration, but they still include all of the most important keywords, concepts, definitions, and theories. Each lesson only focuses on a single major concept, making it easy for you to review individual topics. By going through the entire chapter, you will be ready to:
- Define and discuss cost accounting and its components
- Compare and contrast long-run and short-run costs
- Describe examples of variable and fixed costs for producers
- Differentiate between implicit costs, sunk costs, and opportunity costs
- Share the definition and theory of transactions costs
- Discuss the differences between marginal costs, total costs, and average costs
1. Purpose & Components of Cost Accounting
This lesson will introduce what cost accounting is and provide a definition. It will introduce cost elements and how costs are classified in cost accounting, then compare and contrast cost accounting to financial accounting.
2. Short-Run Costs vs. Long-Run Costs in Economics
In this lesson, we look at the role of short-run costs and long-run costs for producers. We see how both are essential to companies, while each has a specific role in long-term survival and daily operations.
3. Identifying Fixed Costs & Variable Costs for Producers
Ever wonder why the price of brand-name drugs is so much more than generics? Or why all tablet prices seem to congregate at about the same level? This lesson explains those and other mysteries through the lenses of variable and fixed costs.
4. Implicit Costs: Definition & Examples
Not all of the costs a business must consider can be calculated and tracked on a monthly basis. This lesson introduces the concept of implicit costs, including examples and how they differ from explicit costs.
5. Sunk Costs: Definition & Examples
In this lesson, sunk costs are defined and evaluated in the context of company decision making. Concepts are illustrated with examples from the construction industry and a small messenger business.
6. Opportunity Cost: Definition & Examples
Learn about opportunity cost, the most important concept of economics, in this lesson. Opportunity cost is a simple principle that reveals how to make the best economic decisions possible, and it explains why people make the choices they do.
7. Transactions Costs in Economics: Definition, Theory & Examples
In this lesson, we'll discuss transactions costs and their role in contributing to the economy. Our discussion will include definitions of key terms, the theory of transaction costs, and the different types of transaction costs.
8. How Marginal Costs Differ from Average & Total Costs
A major concern for producers is trying to figure out how much something costs to make. Through using marginal costs, total costs, and average costs, producers get a much better idea of the prices they should charge.
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Other chapters within the TECEP Microeconomics: Study Guide & Test Prep course
- Basic Economic Concepts
- Supply & Demand in Microeconomics
- Consumers, Producers & Market Efficiency
- Taxation in Microeconomics
- International Trade in Microeconomics
- Public Sector Economics
- Market Structures
- Profit & Capital Allocation
- Labor Market Economics
- Theories & Trends in Microeconomics
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