To make comparison between normal Price and market Price in some detail:
(i) While market price is determined by the temporary equilibrium between the forces of demand and supply at a time, normal price is the result of the long-run equilibrium between demand and supply when the supply conditions have fully adjusted themselves to the changed demand conditions.
(ii) Market price may actually be reached at a given moment or, day as a result of the temporary equilibrium. But the long-run normal price, in practice, may never reach. There will usually be a change in either the demand 01 the supply conditions underlying the long-run equilibrium before it has had time to come into being. The long run—like tomorrow—never comes.
(iii) Market price is governed by temporary causes and passing events, whereas normal price is influenced by permanent and persistent causes, for in the long-run temporary causes disappear or neutralize one another. Market price, therefore, fluctuates from day to day due to temporary changes either on the side of demand or on that of supply.
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Normal price, on the other hand, under given permanent conditions of demand and supply, remains the same. Normal price is the centre round which the market price fluctuates or it is the level to which it tends to return after having departed from it temporarily. But it should be remembered that this normal price is not a fixed level and this itself changes as a result of any permanent changes in conditions of demand.
(iv) Since in the market period quantity of output cannot be varied, cost of production has no influence on market price. Market price may be above or below the marginal and average cost of production depending upon the demand conditions. If, in the market period, the demand is relatively greater than supply the market price may be established at the level well above both the marginal and the average cost of production. But the long-run normal price must be equal to bath the marginal cost and the minimum long-run average cost.
(v) All commodities have a market price but only reproducible commodities can have normal price. If commodity cannot be reproduced at all, their supply is fixed for all time. If the output of a commodity cannot be varied in response to changes in demand, there is no sense in speaking of their normal price. Such commodities may be pictures of old masters, unique diamonds, old manuscripts, etc. These commodities have market price but no normal price.