Final answer:
The principle representing the cost approach in decision-making is the opportunity cost, which indicates that every choice comes with the forfeit of other alternatives. In taxation, the benefit principle and ability-to-pay principle direct how taxes should be proportioned to ensure fair contribution to public services.
Step-by-step explanation:
The principle that can also mean the cost approach in the context of economic decision-making is the opportunity cost principle. This principle asserts that every choice has a cost, as choosing one option invariably means forgoing another. For example, the opportunity cost of spending money on video games is the alternative experiences or goods, such as movies, that you can no longer afford. Similarly, the principle also applies to more abstract decisions, like choosing to sleep through an economics class, which might cost you the learning and knowledge you would have gained by attending.
In taxation, the benefit principle suggests that taxes should correlate with the benefits received, while the ability-to-pay principle posits that taxes should be levied based on an individual's capacity to pay, hence those with higher incomes should pay more. These principles help shape taxation policies and ensure fairness in contribution toward public services.