It relates in the sense there's a minimum cost of production without losses, not the actual price people are willing to pay.
replyFraming it in terms of the price people might be willing to pay for a single product in isolation frames the point I was making, which was about price competition, right out of the picture.
replyMaybe I'd be willing to pay $10 for product A if I had other options. But if there's a product B for $3 that's not quite as nice but still ticks all my boxes, then product instantly becomes a lot less attractive.