Smith is contemplating whether or not to increase his production of the consumers' good by one unit, which is expected to sell for $110. He will do so only if his expected marginal return—that is, $110 minus his costs for that unit, including interest—is greater than zero. The extra quantities of the various factors that will be required for this production increase are indicated in the diagram by the variables preceded by delta (). He will first need to invest an extra $10, $30, and $20 into factor1, factor2, and factor3 respectively, in order to produce the required extra quantity of a capital good one year later. At that time, he will need to invest another $5 and $25 into factor4 and factor5. A year after that, he will be able to sell the consumers' good.

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