The distinction between normal price and market price
The distinction between normal price and market price is very interesting. The same is noted as under.
(1) Market Price is Read and Normal Price is Ideal Price:
Market Price is the price ruling in the market. This is the price which the consumer pays. Normal price is an ideal price. They operate over a period of time.
(2) Normal Price is stable and Market Price is fluctuating:
Some people have compared normal price with the average level of the sea but market price is the price affected by temporary tides and fluctuations. For example, during period of marriage, the prices of fish and sweets go up.
If these temporary factors disappear, market price has a tendency to come down to the level of normal price. Normal price on the other hand not fluctuating, it is more stable than the market price.
(3) In case of market price demand plays an important role. But in case of normal price supply plays an important role.
(4) All commodities whether reproducible or non-reproducible have market price. But only reproducible commodities have normal price since the supply of perishable commodities cannot be increased. There cannot be any normal price for it.
(5) Market price may be higher, lower or equal to the average cost of production as supply is fixed in the market period. On the other hand, normal price tends to be equal to the average cost of production in the long-run.
(6) Market price is real while normal price is an imaginary. The consumers generally pay market price of a commodity but normal price is imaginary because long-run or tomorrow never comes.