Question

Marshall maintained that time was the “centre of the chief difficulty of almost every economic problem.” How did Marshall solve this problem and how did he demonstrate its application?

Answer 1

As we know nature is not aware of the absolute partition of time into short periods and long; however the two shades into one another by imperceptible gradations, and what is a short duration for one concern, is a long duration for another.

Marshall solved the problem with four time periods: Four classes stand out. In each, price is decided by the relations between supply and demand. For the prevailing market prices, “supply” is taken to mean the stock of the product in question which is on hand, or at all events "in sight." For the prevailing normal prices, where normal relate to short periods of a some months or a year, Supply is classified broadly what can be produced for the price in question with the existing stock of personal, plant, and impersonal, in the provided time. For prevailing normal prices, where Normal is categorised as a long periods of many years, supply demonstrates what can be produced by plant, which itself can be remuneratively applied and produced within the provided time; while lastly, there are very secular or gradual movements of normal price, due to the gradual growth of knowledge, capital, population and the changing conditions of supply and demand from one generation to another