costs market value (?).

In reality, however, the costs of production are indirectly influenced by the market prices that investors expected to obtain. Specifically, investors attempt to anticipate the market demand for a good in order to determine what quantities of factors to expend in its production. As available supplies of those factors are depleted, their marginal costs then increase. We shall trace this process in detail later, but for now we can represent the causal relationships as follows:

expected market value factors expended marginal costs.     

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