economic costs

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The projected costs revealed by an economic appraisal. Economic costs differ from financial costs in that they exclude the transfer payments within the economy, which arise when an investment is made. In the construction of a road, for example, the economic costs exclude taxes and import duties on the materials and plant used in its construction, while any subsidies made are added back to the costs. See economic benefits.

Subjects: Financial Institutions and Services — Accounting.

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