Hodgson's Law is a principle in economics that suggests that the value of a good or service is determined by the cost of its production. This means that prices tend to reflect the resources and efforts required to create them. As production costs change, so do the prices in the market, influencing supply and demand dynamics. The law is named after Richard Hodgson, a 19th-century economist who emphasized the importance of production costs in determining market prices. Understanding Hodgson's Law helps consumers and businesses make informed decisions about purchasing and pricing goods based on their production expenses.