What is economic cost can best be defined as?

Economic cost can best be defined as the total opportunity cost of undertaking a particular economic activity. It includes both explicit costs (such as payments for labor, capital, and materials) and implicit costs (such as the value of time and resources used that could have been used for alternative purposes). Economic cost also includes external costs, which are costs borne by third parties not directly involved in the economic activity.

Economic cost is important because it helps businesses make informed decisions about production and pricing. By understanding the total cost of producing a good or service, businesses can determine the most efficient way to allocate resources and maximize profits. Additionally, understanding economic costs can help policymakers make decisions about allocating resources in a way that maximizes societal welfare.

Overall, economic cost provides a comprehensive measure of the true cost of economic activities and plays a crucial role in shaping economic decisions and policies.