FOR the modern economist, the basic problem with the general literature on racial discrimination is its failure to discuss or even to consider the effect of prices or costs on individual decisions. Bias alone merely expresses a willingness to discriminate, but does not determine the degree of discrimination achieved. We therefore must have not only a measure of willingness to discriminate but a measure of ability to discriminate as well. One measure of ability is the amount of income that must be sacrificed in order to indulge a racial bias; what is sacrificed is usually referred to as the price or cost. A generally accepted postulate of human behavior is the Law of Demand: The greater the cost of indulging a particular bias, the less it will be indulged; the lower the cost of indulging that bias, the more it will be indulged.