If I want to ask the value of an item could I use the sentences below?
1 how much is it
2 how much does that cost
3 what is the cost of that item?
If not, then what is the difference between 1,2 and 3?
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You can say "How much is it?" about something that has already been mentioned, example:
I like that hat. How much is it?.
You can say "How much is that?" or "How much does that item cost?" about something that you indicate (possibly by pointing at it). "How much is it/that?" and "How much does it/that cost?" are ways of saying the same thing.