Search cost

Information costs ( macroeconomics ) is often spoken in economics. More significant, however, this term is in the time of information society in business administration.

Information costs make the effort to represent time, an individual needs to be, for example, about the possibilities for a market to collect information. This time is converted into a monetary value. This monetary value is derived from the potential merit of the same individual in the time required for information retrieval time.

Provide information costs generalized represents the operating expenses that a company needs to be, for example, for an upcoming decision on the next step in a business process to collect information. This expenditure is converted into a monetary value for the use of resources. This monetary value is derived from the potential earnings of the company with the capital used for the acquisition of information.

Calculation example

A likes to eat ice cream. In A's city there are three ice cream vendor. As this ice cream man their stands have not right next to each A needs 15 minutes to find out where a scoop of ice cream cost how much. A gets to his work an hourly wage of 10 euros. So its information costs are 2,50 euros.

Example of use

In the perfect competition market, it is assumed that information costs are zero.

• Economics