Question

Explain the classification of market on the basis of time.

Answer 1

1. Very short period: Very short period is a period in which supply is fixed and price is determined by the demand. The time period is for a few days or weeks in which the supply of commodity cannot be increased.
2. Short period: Short period is a period of less than one year. In this period, firms can only make adjustments in inputs like labour to increase the supply of goods and services.
3. Long period: Long run is a period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all costs. It is for a few years, generally up to five years.
4. Very long period: Very long period is a production time that is so long that all inputs are variable. It is of more than five years.