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What is Real Cost in Economics?

Here we Understand the Concept of Real Cost in Economics in detailed.

What is Real Cost in Economics?
Real Cost:
According to Prof. Marshall, the Real cost of production of a commodity has been defined as follows:
According to him, "The exertions of all the different kinds of labour that are directly or indirectly involved in making it; together with the abstinence or rather the waitings required for saving the capital used in making it, all these efforts and sacrifices together will be called the real costs of production of that commodity."
According to him, the existence of real cost is beyond dispute. A great part of work is painful and disagreeable. Labour implies deprivation of leisure. Here Saving denotes sacrifice of present consumption. But real cost is a psychological entity, it cannot be measured in terms of money. Not all kinds of labour involves pain. The most highly paid work is generally enjoyable. Saving does not mean always sacrifice. There is no sacrifice of present consumption when rich persons save a part of their income. Same way, the supply of land involves neither efforts nor sacrifice, yet we include rent in money cost.
If money costs do not represent real cost, how are they fixed? This brings us the concept to understand more in detailed about the Opportunity cost.
What is Real Cost in Economics
psychological entity
It cannot be measured in terms of money
Theory of Costs - Real Cost.
Kinnari
Tech writer in NewsandStory
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