Cost, often referred to as price, is the amount of money required to purchase a good or service. It reflects the value assigned to an item based on factors such as production expenses, demand, and market competition. Understanding cost is essential for consumers and businesses alike, as it influences purchasing decisions and profitability. In economics, cost can also encompass various types, including fixed costs, which remain constant regardless of production levels, and variable costs, which fluctuate with output. Analyzing these costs helps businesses like manufacturers and retailers set appropriate prices and manage their budgets effectively.