Relative prices are determined by cost, not demand, is the most important proposition of the Theory of Value, which has been handed down from the classical school to Sraffa. The neoclassical champion, K. J. Arrow, has elaborated on this argument in a negative context, which I will quote from three places.
Kenneth J. Arrow, Frank H. Hahn, General competitive analysis, (Advanced textbooks in economics, v. 12), North-Holland, 1st ed. 1971 5th pri. 1988
Evaluation of K. J. Arrow's "Non-Substitution Theorem"
Chapter 1 Historical Introduction, p.14
Samuelson [1951] and Georgescu-Roegen [1951] showed that with one primary factor it is still true that relative prices of produced goods are determined by the tehnology, independent of demand conditions. This is, in a certain sense, a suprising resuscitation of the classical theory in which prices are determined by supply conditions alone. Since competitive production always minimizes costs, it follows that the technique actually chosen for the production for any commodity is also independnt of demand conditions, though it will depend, in general, on technological conditions in other industries. For more extended discussion, see Section 2.11.
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