Q.Explain the classification of market on the basis of time.
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Start your 14-day free trial to unlock the full solution →On the basis of time the market is classified into four types — very short period (supply fixed), short period (supply partly adjustable using existing plant), long period (supply fully adjustable by changing plant size), and very long/secular period (supply adjusts to lasting changes in population, tastes and technology).
Classification of Market on the Basis of Time
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Very short period (market period) — The time is so short that supply is fixed; the existing stock cannot be increased. Price is therefore determined mainly by demand. This applies to perishable goods such as fish, vegetables and flowers.
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Short period — Supply can be increased to a limited extent by using the existing plant and equipment more intensively (extra labour, shifts, raw material), but the scale of plant cannot be changed. Both demand and supply influence price, though demand has a stronger role.
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Long period — The period is long enough for firms to change the size of the plant, adopt new techniques, and for new firms to enter or leave. Supply can be fully adjusted to demand, so supply (cost of production) plays the dominant role in determining price.
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