An essential characteristic of the cost curves we have observed is that they are based on real production relationships. The dollar costs we compute are a direct reflection of underlying resource costs — the land, labor, and capital used in the production process. Not everyone counts this way. On the contrary, accountants and businesspeople typically count dollar costs only and ignore any resource use that doesn't result in an explicit dollar cost.
Return to Tight Jeans for a moment to see the difference. When we computed the dollar cost of producing 15 pairs of jeans per day, we noted the following resource inputs: