Consumers often choose not directly from the commodities that they purchase but from commodities they transform into goods through a household production function

Production function

In microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs...

. It is these goods that they value. The idea was originally proposed by Gary Becker

Gary Becker

Gary Stanley Becker is an American economist. He is a professor of economics, sociology at the University of Chicago and a professor at the Booth School of Business. He was awarded the Nobel Memorial Prize in Economic Sciences in 1992, and received the United States' Presidential Medal of Freedom...

, Kelvin Lancaster

Kelvin Lancaster

Kelvin John Lancaster was a mathematical economist and John Bates Clark professor of economics at Columbia University. He is best known for the development of the Theory of the Second Best with Richard Lipsey...

 and Richard Muth in the mid 1960s.

Example

A simple example of this is baking a cake

Cake

Cake is a form of bread or bread-like food. In its modern forms, it is typically a sweet and enriched baked dessert. In its oldest forms, cakes were normally fried breads or cheesecakes, and normally had a disk shape...

. The consumer purchases flour, eggs, and sugar and then uses some labor and time in consuming to produce a cake. The consumer did not really want the flour, sugar, or eggs, but purchased them to produce the cake consumed.