The assumption that any enterprise will try to produce its output at the lowest possible cost. This is clearly desirable for a profit-maximizing firm. It is likely to appeal to public bodies also, as a saving of cost in any one project will either allow lower taxes, or free resources for other desirable uses. Cost minimization does however have to be taken with some provisos. First, it refers to the cost of providing goods or services of a specified quality; it does not mean achieving lower costs by cutting standards. Second, it does not imply operating at the lowest point of a U-shaped cost curve, unless the market will accept the level of output which this entails. If there are large economies of scale, the desired output may well be less than the minimum point on the cost curve: what is socially desirable is producing what is wanted at minimum cost, not achieving low average cost via producing things nobody wants. Third, actual firms have to anticipate that demand will fluctuate over some range: cost minimization means achieving low average costs over a range of outputs. This may involve choosing flexible equipment and working methods, involving higher average costs than could be achieved if a constant level of output was required.

• bonus
• bonus issue
• bookkeeping, double-entry
• book value
• boom
• Borrow, General Agreement to
• borrowing
• borrowing, consumer
• Borrowing Requirement, Public Sector
• bottleneck
• bottom line
• bound
• boundary, production possibility
• bounded rationality
• Bowley box
• box diagram
• boycott
• BP curve
• Brady Plan
• brain drain
• branch banking
• brand
• brand loyalty
• Brandt Report
• break-even