TIME : Importance of time in the determination of value
The time factor has a very great importance in the theory of value.
The element of time occupies a vital place in the Marshallian theory of value. Alfred marshal According to the traditional value theory, the forces of Demand and supply determine the price.
The position of supply is influenced by the element of time taken into consideration.
Both demand and supply like the two blades of scissors, exert their influence on the determination of value. But their relative importance depends on the period of time given to the forces of supply to adjust themselves to the changes in demand.
Marshall has given such a great importance to the time element in the theory of value and has divided the pricing of products into four time periods:
1. Very Short Period or Market Period
2. Short Period
3. Long Period
4. Secular Period or Very Long Period
1. Very Short Period or Market period :
The market period is a very short period in which the supply of a commodity is fixed. It is the variations in demand that determine the price in such a market period. The time period is so short that supply is not responsive to demand. This market period may be an hour, a day or a few days, or even a few weeks depending upon the type of the commodity under consideration as to whether it is a perishable or semi-durable one.”e
Example of the market period is the farming industry. Depends on the agriculture,Giving the length of a growing season, once crops are harvested, output is fixed, inputs are fixed, and the only task at hand is to sell the output in the market.Agro based industries are the best example to this.
2.The Short-Period :
As the name suggests, short-period short-period markets are generally for a shorter period of time which can range between hours or a month. These are mainly for perishable goods.
3.Long Period :
Long period markets can last anywhere between a few weeks to a few years. These are generally for consumer and industrial goods and services which do not perish easily during storage.
4.Secular Period :
The market for a commodity in a secular time secular time period is reffered to as secular Or very long period market. This period run overa decades.
During this period dynamic changes may occur. So that the changes in demand and supply may varry to every time.
So, there can be a perfect adjustments tooks place between demand and supply in secular period.
