cation of its value. The market price of a good can differ from the costs incurred in obtaining the inputs to produce the good because many forces affect market prices through changes in demand and supply. New methods of production that increase efficiency can increase supply at any given price. Changes in the relative prices of inputs, including finance capital, wages, land rents, and the prices of parts and components, have complex effects on supply. The entry and exit of producers and decisions to expand or contract production capacity also impact supply. The introduction of innovative products can create shifts in both demand and supply toward these new products. Changes in consumer tastes and income, as well as changes in the prices of substitute and alternative goods, can also change demand at any given price. Accordingly, the market prices of output are unlikely to correspond to the past costs incurred to produce that output. Even if individual producers try to anticipate output prices in their decisions, market uncertainty will defeat their efforts, leading to randomness in profit margins. Even if market prices were to reflect accurately the costs of the marginal pro- ducer, they would depart from the costs of the inframarginal producer. Costs tend to vary across firms because of differences in business methods, management techniques, production processes, and technological knowledge. Moreover, output value can depart from input costs because firms combine inputs in different ways, creating different products and addressing customer needs differently. Firm het- erogeneity strongly implies that the unit costs of any individual firm are likely to differ from the market price. Under the textbook paradigm of perfect competition with identical firms and static demands, efficient entry guarantees that the market price eventually equals the unit cost of firms. This need not be the case when unit costs vary across firms. Because of uncertainty regarding changes in output markets, there are likely to be deviations