ABSTRACT
The key to success in developing cost of production estimates is in limiting the magnitude and importance of errors. Measurements of cost will be inaccurate but attention to the specific uses of the estimates ran help reduce the practical importance of inaccuracies for decision-makers. Many analysts are uncomfortable with the imputations used in creating the "economic costs" and therefore use only cash expenses in cost comparisons. The Farm Costs and Returns Survey accounts for hired labor expenses, including total payments for contract labor and payments for non-wage costs of employing labor. The foregoing comments were prepared with an aim to better understand what cost of production measures are telling us. In the tradition of P. Friedman and George J. Stigler, it must be noted that costs of production for a farm firm are fundamentally unique to that farm. The total economic costs include imputations for the use of all invested operator capital.
