The demand for a consumer good is determined by aggregating the value scales of all consumers of the good. (All buyers are here assumed to be consumers; the effects of speculative buying will be considered in a later subsection.) The marginal value of a unit of the good to consumers, as compared with the marginal value of the monetary unit, imposes an upper limit on the price per unit. The supply is determined by aggregating the value scales of all sellers of the good. The marginal value of a unit of the good to sellers, again compared with money, provides a lower limit for the established per-unit price. But the marginal money values of the good to buyers and sellers depend on the stocks of the good available in the market—and more particularly, on how much of the good has already been produced. What determines how much of the good is produced?

The producers decide how much to produce in such a way as to maximize their value scales. Specifically, each producer weighs the cost of the various factors of production against his or her anticipated selling price in the marketplace—taking into account the interest cost associated with each factor across the period of production for that factor. Because the effects of uncertainty and risk will be discussed separately later, we assume here that the producer can accurately predict all costs and the selling price of his or her ultimate product. The difference between the selling price and the incremental unit's marginal cost of production, including interest, is the producer's marginal return.