by Walter E. Williams via LewRockwell.com
Suppose you buy a gallon of gas for $3. How much did it cost you? You say, “Williams, that’s a silly question. It cost $3.” That’s where you’re mistaken, because there’s a difference between price and cost. To prove that price and cost are not the same, consider the following. Suppose you live and work in New York City and routinely pay $15 for a haircut. Imagine you were told that there’s a barber in Boise, Idaho, who can give you the identical haircut for just $5. Would you start going to the Boise barber? I’m betting you’d answer no because even though the price is cheaper, the cost is greater.
We might think of price as the money that’s actually given in exchange for the transfer of ownership. When you purchased the gallon of gas, you simply transferred your ownership of $3. What…
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