ECO 101

Q1- Discuss the similarities and differences between Accountant cost and Economist cost

Accounting cost “is the overall cost of anything your business has paid for. These costs include the
following: Rent, utility expenses, food and entertainment expenses, travel expenses, including
transportation and hotels, payroll expenses, including salaries and related payroll taxes, supplies,
Insurance, and any other expenses incurred during the normal course of business. All of the expenses
listed above are considered explicit costs, which means they are direct costs associated with your
business. These costs are automatically accounted for each time an expense is recorded in your
accounting software or ledgers. Economic cost is a step further than typical bookkeeping basics and is
often used by economists to compare two separate courses of action. It also looks at the impact each
action would have on your business”[ CITATION The1 \l 1033 ].

differences between Accountant cost and Economist cost

According to the economics discussion net, “An economist thinks of cost differently from an
accountant, who is concerned with the financial statements.
Accountants tend to take a retrospective look at a firm’s finances as they have to keep track of
assets and liabilities and evaluate past performance. Accounting costs include actual expenses
and depreciation expenses for capital equipment, which are determine for tax purposes.
Economists, on the other hand, take a forward-looking view of the firm. They are concerned
with what costs are expected to be in the future, and how the firm would be able to rearrange
its resources to lower its costs and improve its profitability. They must, thus, be concerned with
opportunity costs”.

“For example, consider a firm that owns a building, and, therefore, pays no rent for office space.
Does this mean that the cost of office space is zero for the firm? Though an accountant might treat
this cost as zero, an economist would consider the rent that the firm could have earned by leasing
the office space to another company. This foregone rent is an opportunity cost of utilizing the office
space and should be included as part of the economic cost of doing business”[ CITATION Eco \l
1033 ].

“Accountants and economists also treat depreciation differently. When estimating the
future profitability of a business, an economist is concerned with the capital cost of plant
and machinery. This involves not only the explicit cost of buying and running the machinery,
but also cost associated with wear and tear. While accountants use tax rules to determine
allowable depreciation in their cost and profit calculations. But these depreciation
allowances need not reflect the actual wear and tear on the equipment.
Accounting cost is used for tax purposes or to determine financial health of your business
while economic cost is Used to make long-term strategic decisions, these strategic decisions
are taken in accordance with organizational mission and vision.
Accounting costs are the actual monetary costs recorded on the books while economic costs
include those costs plus opportunity costs. Opportunity costs are the benefits you could
 have received if you had chosen one course of action, but that you didn't because you went
with another option.
Calculating accounting cost is a necessity for any business, small and large, while calculating
economic cost is not a necessity, it can be a valuable tool when looking to make an informed
decision regarding your business.
Economic cost allows you to look at a variety of “what-if” scenarios and see exactly how
those scenarios might affect your business and your bottom line. While accounting cost Uses
standard costs incurred in business”[ CITATION Eco \l 1033 ].

Similarities between Accountant cost and Economist cost

“Accountants and economists both include actual outlays, called explicit costs, in their
calculations. Explicit costs include wages, salaries, etc. For accountants, explicit costs are
important because they involve direct payments by a company. These costs are relevant for the
economists because the costs of wages and materials represent money that could have been
usefully spent elsewhere”[ CITATION Eco \l 1033 ].

Q2- Compare and contrast between economic growth and economic development

Contrasting between economic growth and economic development

 Both Economic Growth and Economic Development have different measurement indicators.
Economic Development can be measured through improvement in the life expectancy rate,
infant mortality rate, literacy rate, and poverty rates. However, Economic Growth can be
measured through an increase in the GDP, per capita income, etc.
o “Economic growth indicates the expansion of the Gross Domestic Product (GDP) of the
country and the concept of Economic Growth is basically related to the developed
countries. Economic Development is a broader concept than Economic Growth.
Economic Development refers to the increase of the Real National Income of the
economic and socio-economic structure of any country over a long period of time.
Economic Development is related to underdeveloped or developing countries of the
world.
o Unlike economic development, Economic growth is an automatic process. Meanwhile,
economic development is the outcome of planned and result-oriented activities.
o Economic Growth does not reflect the depletion of natural resources. Depletion of
resources such as pollution, congestion & disease. Governments are under pressure due
to the environmental issues, majorly the problem is due to Global warming. However,
Economic Development is concerned with Sustainability, which means meeting the
needs of the present without compromising.
o Economic growth does not consider the Income from the Informal Economy. The
Informal economy is unrecorded economic activity. Whereas, Economic Development
takes consideration of all activities, whether formal or informal, and eases people with
low standards of living a suitable shelter and with proper employment.
o Economic Growth is the increase in the real output of the country in a particular span of
time. Whereas, Economic Development is the increase in the level of production in an
economy along with enrichment of living standards and the advancement of technology.
 o Economic growth is single dimensional in nature as it only focuses on income of the
people. Whereas, Economic development is multi-dimensional in nature as it focuses on
both income and improvement of living standards of the people.
o Economic growth is for short term/short period. It is measured in certain time
frame/period. While economic development is a continuous and long-term process.
Economic development does not have specific time period to measure”[CITATION Tha \l
1033 ].
 Economic growth just glances at the quantitative angle. It gets quantitative changes the
economy. While, economic development acquires quantitative and subjective change the
economy.
 Economic development requires intercession from the public authority as every one of the
formative strategies are framed by the public authority. While, Economic growth is a
programmed cycle that might possibly require mediation from the public authority.
 Economic growth is somewhat restricted idea when contrasted with monetary turn of events.
While economic development is a more extensive idea than monetary turn of events.
 Economic growth is important however insufficient to accomplish financial turn of events.

Comparison and contrast between economic growth and economic development

Comparison Economic Development Economic Growth

Scope “Economic Development is
considered as a
Multidimensional phenomenon
because it focuses on the
income of the people and on
the improvement of the living
standards of the people of the
country”[CITATION Tha \l
1033 ].
Measurement “Both Qualitative &
Quantitative Terms:
HDI (Human Development
Index), gender-related index,
Human poverty index, infant
mortality, literacy rate
etc.”[CITATION Tha \l 1033 ]
Effect According to Madhuri Thakur,
“qualitative and Quantitative
Impact on the economy.
Improvement in life expectancy
rate, infant, literacy rate,
poverty rates, and mortality
rate”.
Term “Long-term process”[CITATION
Tha \l 1033 ]
Related To Economic Development is
identified with Immature and
According to Madhuri Thakur,
“Economic Growth is
considered as a single-
dimensional in nature as it only
focuses on the income of the
people of the country”.
“Quantitative Terms:
Increases in real GDP”[CITATION
Tha \l 1033 ].
“Brings a quantitative impact on
the economy. Increase in the
indicators like per capita income
and GDP, etc.”[CITATION Tha \l
1033 ]
“Short term process”[CITATION
Tha \l 1033 ]
Economic growth is identified
with created nations of the
 agricultural nations of the
world.
Concept “Economic development is a
much broader concept than
economic growth.
Economic development =
Economic Growth + Standard of
Living”[CITATION Tha \l 1033 ]
Relevance “Economic development is
more relevant to measure
progress and quality of life in
developing nations”[ CITATION
Dif14 \l 1033 ].
Implications “Economic development implies
an upward movement of the
entire social system in terms of
income, savings and investment
along with progressive changes
in socioeconomic structure of
country”[ CITATION Dif14 \l
1033 ].
Meaning /Definition “It considers the rise in the
output in an economy along
with the advancement of the
HDI index which considers a rise
in living standards,
advancement in technology and
overall happiness index of a
nation”[CITATION Dhe21 \l
1033 ].
Frequency of Occurrence “Continuous process”[CITATION
Dhe21 \l 1033 ]
Wealth Distribution “It focuses on a balanced and
equitable distribution of wealth
among all individuals and tries
to uplift the downgrade
societies”[CITATION Dhe21 \l
1033 ].
Government Aid Exceptionally subject to
government intercession as it
incorporates far reaching
arrangements changes so
without government mediation
it isn't possible
world.
“Economic Growth is a
narrower concept than
economic
development”[CITATION Tha \l
1033 ].
“Economic growth is a more
relevant metric for progress in
developed countries. But it's
widely used in all countries
because growth is a necessary
condition for
development”[ CITATION
Dif14 \l 1033 ].
According to Diffen, “economic
growth refers to an increase
over time in a country`s real
output of goods and services
(GNP) or real output per capita
income”.
According to Dheeraj Vaidya
and Madhuri Thakur, “it is the
positive quantitative change in
the output of an economy in a
particular time period”.
“In a certain period of
time”[CITATION Dhe21 \l 1033 ]
“Economic growth does not
emphasize on the fair and equal
distribution of wealth/income
among its entire
people”[CITATION Dhe21 \l
1033 ].
It is a programmed interaction
so may not need government
support/help or mediation
Works Cited
"Diffen." 12 June 2014. Economic Development vs. Economic Growth.
<https://www.diffen.com/difference/Economic_Development_vs_Economic_Growth>.

Economics Discussion Net. Difference between Economic Cost and Accounting Cost. n.d.
<https://www.economicsdiscussion.net/production/cost-of-production/difference-between-
economic-cost-and-accounting-cost/16344>.

Thakur, Dheeraj Vaidya and Madhuri. "Difference Between Economic Growth and Economic
Development." 2021. WallStreetMojo. <https://www.wallstreetmojo.com/differences-between-
economic-growth-and-economic-development/>.

Thakur, Madhuri. Economic Growth vs Economic Development. n.d.

<https://www.educba.com/economic-growtevelopment/h-vs-economic-d>.

The Blueprint. How to Calculate and Use Accounting Cost and Economic Cost. n.d.
<https://www.fool.com/the-blueprint/accounting-cost/>.