The economic cost can best be defined as:

The economic cost can best be defined as:

A) any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers.

B) any contractual obligation to labor or material suppliers.

C) payments that resource owners must receive to ensure the resources’ continued supply.

D) all costs exclusive of payments to fixed factors of production.

Answer: C) payments that resource owners must receive to ensure the resources’ continued supply.

Cost is defined as the amount of sacrifice any resource has to undergo or the worth of the next best opportunity that a resource has to forego when used in a certain way. It stands for the amount below which resource owners cannot be expected to be paid and which is necessary to induce them to provide their resources for a particular purpose. This entails not only direct payments in cash but also other forms of costs most of which are associated with the use of owned resources. Economic cost is one of the more fundamental ideas that help in efficient resource utilization. It also helps in determining the situation below which a firm should price its products to be sustainable further in the future.