Question

Into how many periods has Marshall divided production time on the basis of supply?

• A. Two
• B. Three
• C. Four
• D. Seven

Hint:

Remember Marshall's four time periods for supply analysis: Market Period (fixed supply), Short Period (variable factors change), Long Period (all factors change), and Very Long Period (technology/tastes change).

Answer 1

The Correct Option is C

Alfred Marshall, a prominent economist, introduced the concept of time periods in the context of price determination and supply elasticity. He categorized the time frame for production into four distinct periods:

Market Period (or Very Short Period): Supply is fixed (perfectly inelastic) because the time is too short to make any changes to output. Price is determined solely by demand.
Short Period: Firms can change output by altering variable factors (like labor and raw materials) but not fixed factors (like plant and machinery). The supply can be adjusted to some extent.
Long Period: All factors of production are variable. Firms can adjust their plant size, and new firms can enter or exit the industry. Supply is highly elastic.
Very Long Period (or Secular Period): This period is long enough for fundamental changes in technology, population, and consumer tastes to occur, which can shift supply and demand curves.
Thus, Marshall divided production time into four periods.