Question

Market price is related to

• A. Short-run market
• B. Long-run market
• C. Very long-run market
• D. All of these

Hint:

Market prices are determined by the interaction of supply and demand, and they can fluctuate differently in the short-run, long-run, and very long-run.

Answer 1

The Correct Option is D

Step 1: Understanding Market Price and Time Frames:
Market price refers to the price at which goods and services are bought and sold in the market. The market price is influenced by factors such as supply and demand, production costs, and consumer preferences. The time frame under consideration (short-run, long-run, or very long-run) can significantly affect how prices behave in the market.
Step 2: Analyzing the Options:
- Option (A) Short-run market: In the short-run, market prices may be influenced by temporary factors such as supply shocks or changes in demand.
- Option (B) Long-run market: In the long-run, market prices tend to adjust to equilibrium levels as supply and demand conditions change.
- Option (C) Very long-run market: In the very long run, all factors of production are variable, and market prices can be influenced by technological advancements, changes in consumer preferences, and other long-term factors.
- Option (D) All of these: Market prices are influenced by all time frames—short-run, long-run, and very long-run. Each of these time frames affects how prices are set in the market, with varying degrees of flexibility and adjustment.
Step 3: Conclusion and Answer:
The correct answer is (D) because market prices are influenced by factors in the short-run, long-run, and very long-run, with each time frame having a different effect on how prices behave.