Prague, Praha, Costs of living

Prague is more expensive because the set of buyers and potential buyers (or consumers) is wealthier which is why the equilibrium market price for many things (like restaurants) is higher. The potential buyers are wealthier because the wages in Prague are higher, often by a factor of two in average, than they are outside Prague; and because the buyers are supplemented with foreign tourists or officials or business people who mostly do their work in Prague.