Why Are Costs Important In Economics? Why Don't Economists Use The Same Cost Data As Accountants Use?


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Ellie Hoe answered
Cost analysis is an important part of economics. Economics heavily relies on the analysis of demand supply, market forces, pricing mechanisms, describes the factors of production, and most importantly the cost relationships which describe the situations in which firms can achieve lowest average costs. Costs are important because they are part of businesses which has to be analyzed under various theories of economics. Economic costs differ from accounting costs because accountants report costs on historical basis in their financial statements. Accountants use costs to determine the true picture of their assets in the company and to give an account of how much expenses have been incurred during a fiscal year.

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