Explain the classification of market on the basis of time.

Answer: On the basis of time (as classified by Alfred Marshall) markets are very short period, short period, long period and very long period markets.

1. Very short period market (market period): Supply is fixed and cannot be changed, so price is determined by demand alone. It deals in perishable goods like vegetables, fruits, fish and milk. The price is called market price.
2. Short period market: The time is too short to change fixed factors (plant, machinery), but supply can be adjusted to some extent by changing variable factors like labour and raw material. Price is determined by both demand and supply, and is called short-run normal price.
3. Long period market: The time is long enough to change all factors of production, so supply can be fully adjusted to demand. New firms can enter and old firms can leave. The price is the long-run normal price.
4. Very long period market (secular period): The time is very long (10 years or more), so changes take place in population, technology, tastes and capital. Supply can be fully adjusted to changing demand. Price is called secular price.