Q.Explain the meaning of market and its classification on the basis of area and time.

A market, in economics, is a much wider idea than a physical marketplace, and it can be classified by how far it spreads and by how much time sellers have to adjust supply.

Define market, then cover the area-based and time-based classifications in turn.

Meaning of Market. In economics, a market is not necessarily a physical place; it is the whole network of buyers and sellers of a commodity, in direct or indirect contact — face to face, or through telephone, an agent, or the internet — through which a price is settled and the good is exchanged. Its essential elements are a commodity, buyers and sellers, an area over which they are spread, contact between them, and a price arrived at through their interaction.

Classification on the basis of Area. Markets differ in geographical extent: a local market is confined to a single town or locality (fresh vegetables, local services); a regional/state market extends across a wider region or state; a national market covers the whole country, supported by developed transport and communication (most branded manufactured goods); and an international/world market spans national borders, for durable, easily transportable goods in worldwide demand (crude oil, gold, wheat).

Classification on the basis of Time (Marshall's classification). Markets are also classified by how much time sellers have to adjust supply: in the very short period (market period), supply is completely fixed and price is determined almost entirely by demand; in the short period, only variable factors (labour, raw material) can be adjusted, while fixed factors (plant, machinery) stay unchanged; in the long period, all factors including plant and machinery can be varied, so supply fully adjusts to demand; and in the very long (secular) period, spanning many years, even population, technology, and consumer tastes change, so this period is used to study long-run trends rather than a single equilibrium price.