Yes it is clearly circular. We are trying to have a theory of value/prices, and you want to explain it via prices.
No, it clearly isn't. It suggests a regression of prices backwards in time influencing present prices, but it is inevitable that those prices eventually have to start somewhere. However, those prices did not generally start with supermarkets, as most supermarket commodities existed prior to supermarkets.
What example do you have? Whatever it is we can investigate and somewhere you'll see additional costs are always involved.
As I said, the import of bread or raw materials to make bread in of bermuda vs.gambia.
You keep talking about historical prices, I don't disagree that they are used to set prices. However, your reasoning is still circular and therefore non explanatory. If you want to say to me that prices are used to set prices in the real world I already said I agree with you.
It's not non explanatory as it clearly explains the current prices of commodities within a supermarket. Yes, historical prices of good A is used to steer present prices of good A. This is neither controversial or circular.
In your original example you said the costs were $20. Regardless of what your trying to get across here, if the labor value is $21, it may be exchanged for $25
The labor value to produce the apple was $20. But the labor value to stock the apple was an additional $1.
it may be exchanged for $25, but this is only for a short time where demand outstrips supply, when supply increases, you will see the apple generally exchanged at its labor value.
Would you really expect to see red apples exchange at $25 dollars per apple?
The labor theory does not necessitate that all exchanges must occur at exactly labor value; things are always changing because of demand and supply.
That is exactly what it must necessitate, or it is not a theory of value, but rather a statement about bankruptcy.
And how does the business determine what the reliable market is?
He either looks to historical prices, or he looks to his competitors, or he takes a guess, usually expecting it to be above the cost of production. If he is not able to sell it at the price he has guessed it at (or not able to sell sufficient amounts), he must lower his prices until the amount of sales rise to acceptable levels, even if this price is below cost of production. (Unless he can instead employ the specific commodity in some other fashion.)
He references the price he could set with the cost. E.g. He will stock it at $21 only if he can generate profit at that price, how can he know if he can generate profit? Only if he can calculate cost. So where back to square one, we have to explain cost.
Cost is only necessary to explain and calculate in regards to running a profitable enterprise. For the purchaser, the viability of the enterprise generally does not even enter into his mind. He does not calculate on costs beyond the immediate price the seller asks for the commodity. And someone running an enterprise does not simply reference the price he could set with the cost, he must also reference the price his customers are willing to pay. If he has 500 $21 apples (labor costs $20 + $1) but no-one will purchase them at $21, he is still stuck with 500 items of a rapidly expiring commodity. If he must sell them at $5 or 0.5$ a piece instead in order to clear them out, he may do so in order to at least recoup some of his costs. In other words, it is the whim of his customers that set the exchange value on the apples, not the labor value.