ON THE BASIS OF TIME

On the basis of Time

Alfred Marshall conceived the ‘Time’ element in markets and on the basis of this, markets are classified into:

Very short period market: Market period or very short period refers to a period of time in which supply is fixed and cannot be increased or decreased. Commodities like vegetables, flower, fish, eggs, fruits, milk, etc., which are perishable and the supply of which cannot be changed in the very short period come under this category. Since supply is fixed, very short period price is dependent on demand. An increase in demand will raise the prices vice versa.

Short-period Market: Short period is a period which is slightly longer than the very short period. In this period, the supply of output may be increased by increasing the employment of variable factors with the given fixed factors and state of technology. Since supply can be moderately adjusted, the changes in the short period prices on account of changes in demand are less compared to market period.

Long-period Market: In the long period, all factors become variable and the supply of commodities may be changed by altering the scale of production. As such, supply may be fully adjusted to changes in demand conditions. The interaction between long run supply and demand determines long run equilibrium price or ‘normal price’.

Very long-period or secular period is one when secular movements are recorded in certain factors over a period of time. The period is very long. The factors include the size of the population, capital supply, supply of raw materials etc.

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