The COST-ED model (Costs of Schools, Training, and Education) of the instructional process encourages the recognition of management alternatives and potential cost-savings. It is used to calculate the minimum cost of performing specified instructional tasks. COST-ED components are presented as cost modules in a flowchart format for manpower, teachers, facilities, attrition, and student opportunity. Computer-assisted instruction (CAI) is an educational medium which can be described within the context of the COST-ED model. CAI equipment cost factors are defined on the basis of functions performed: instructional process control, curriculum availability, or student-system communication. Radical economic differences between CAI and classroom instruction explain the"all-or-nothing-effect": CAI can be economically justified only if it becomes the dominant mode of instruction in a given instructional environment. Until CAI costs decline, applications will be confined to the military, welfare, and industrial sectors of the nation. The expansion of CAI into public education depends on methods of submitting, soliciting, and evaluating CAI projects and on public policy measures in behalf of the educational technology industry. (TI)