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Definitions from WordNet

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Differential cost

Definition: Differential cost refers to the difference in costs between two alternative courses of action or decision-making options.

Examples:

Example 1: Noun - Business Decision-making

In business decision-making, managers often analyze the differential cost to determine which option is more financially feasible. For instance, when considering whether to invest in new machinery or continue using the existing one, the differential cost of purchasing the new equipment needs to be evaluated.

Example 2: Adjective - Cost Analysis

Cost analysis may involve examining the differential cost between two suppliers for the same material. Conducting a detailed cost comparison helps determine which supplier offers the most competitive differential cost, thus ensuring a cost-effective procurement process.

Example 3: Verb - Economic Analysis

During economic analysis, economists often employ differential cost calculations to assess the impact of certain policies or projects on the overall budget. Governments, for instance, need to estimate the differential cost of implementing new infrastructures to determine their feasibility.

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