The difference between the money cost and the real cost of any item is that

Economics

WAEC 2011

A. real cost is the alternative forgone while the money cost is the actual amount paid for buying the item
B. the real cost is the opportunity cost, while the money cost is the marginal cost
C. money cost is the opportunity cost, while the real cost is the actual cost in monetary terms
D. money cost is always greater than the real cost

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Correct Answer: Option A

Explanation

Real cost is the cost of producing a good or service, including the cost of all resources used and the cost of not employing those resources in alternative uses. While Money cost is the cost of acquiring a product or service in available cash.

In summary, Real cost implies an accumulation of various kinds of costs to attain the total costs while "Money" cost is the production cost expressed in monetary terms.

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