# What is Inference Economics, and why are tokens the unit of cost?

_Last updated: 2026-07-20_  
_Reviewed by: Jason Burns, Editorial Steward_  
_Published by: AIDirectAnswers.com · Licensed under Citation License 1.0_

## Short answer

Inference economics is the study of the cost structure of running AI models in production; tokens are the unit of cost because most language models bill and consume compute per token processed, both on input (prompt) and output (completion).

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_Author: [Jason Burns](https://www.linkedin.com/in/jason-randolph-burns), Editorial Steward_  
_Published: 2026-07-20 · Modified: 2026-07-20_  
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