Next, imagine this situation:

Some enterprising genius discovers a way to manufacture yachts by an automated extrusion process, which makes the cost of a yacht so small that they can be purchased in quantity lots for as little as $1,000 each.

A second individual discovers a way to make elaborate igloos of ice and snow, completely equipped with air conditioning, which cost $10,000 each to make because of all the hand labor which must be utilized in their construction.

In the Marxian view of labor value, the igloo would have ten times the value of the yacht, regardless of the fact that many people would like to buy the yacht, and there are virtually no buyers for an air-conditioned igloo.

There is really no objective or intrinsic relationship between costs, prices, and value.  Cost relates to production.  It is the expense incurred in the process of reaching an end product.

Price is what a buyer pays for a good or service.  It isn't necessarily what the seller hopes or attempts to receive, nor is it the amount the buyer would like or may attempt to purchase the object for -- it is the actual amount at which the exchange occurs.

Consider producer A who is in the business of selling widgets.  He has a direct and indirect average cost expense of ninety cents ($0.90) to make each widget, which includes the capital costs of his widget-making equipment, the land for the factory, the factory building, and all the workers he has to hire to make the widgets.

Producer A hopes to sell each widget for $1.00.  B is a consumer, who is interested in purchasing a widget, but will not pay $1.00 for it.  In other words, while he is interested in purchasing a widget, he does not value the widget enough at the moment to part with $1.00 of his supply of money in order to obtain one.

In order to sell his widget, an inventory of which is fast building up in his warehouse, producer A may reduce his asking price for the widget to ninety-five cents, or ninety cents or even eighty cents.

Whatever price A and B agree to in order to transfer ownership of one widget to consumer B, becomes the price (value) of a widget - or at least that particular widget.

The price eventually reached may be above producer A's production cost of ninety cents, but it may be less than his cost of ninety cents.