Last modified on August 27, 2011, at 12:03

Real price

Real price is the opportunity cost of a good or service. The real price of a good which costs $5 is the best alternative use of that $5. Even things that we often consider free have a real price. For example, the real price of watching "free" television for an hour is the money you could have earned by working in that hour, or the money you could have enabled yourself to earn in the future by studying.