Question

Market price is found in

• A. Very short period market
• B. Long period market
• C. Very long period market
• D. None of these

Hint:

Associate "Market Price" with the "Very Short Period" where supply is fixed and demand is the primary price determinant. Associate "Normal Price" with the "Long Period" where supply can fully adjust.

Answer 1

The Correct Option is A

The concept of "market price" is associated with the very short period, also known as the market period. In this time frame, the supply of a commodity, especially perishable goods, is considered fixed. Because producers do not have enough time to alter the level of production in response to changes in demand, the price is determined primarily by the prevailing demand conditions. This day-to-day price, which can fluctuate significantly, is the market price. In contrast, the "normal price" is the price that tends to prevail in the long period, where supply can fully adjust to demand.