Compare the fixed and variable factor of production
Answers
Answered by
0
Fixed factor: fixed factors are those which remain unchanged as out output of the firm changes in the short-run. In other words as a firm increases or decreases its output in in the short-run, fixed factors remain constant. They are independent of output in the short-run. Machines , factory building , plants , permanent employees etc. are the examples of fixed factors.To construct a new plant or expand the existing one for changing the output of the firm will take time. It is not possible in the short-run. What is possible is to employ more of labour and raw materials in the existing plant for expanding the output of the firm.
Variable factor: variable factors are those factor inputs which change with the change of output in the short-run. Raw materials, labour, fuel, power etc. are the examples of variable factors. If a firm wants to expand output in the short-run, then it can employ more labourers, purchase more raw materials and can use more power. Similarly if it wants to contract, out put then it can retrench worker's, purchase less of raw materials and fuel etc. This shows that as production increases , variable factors also increase and as production falls the quantities of variable factors also fall.
It is important to note that distinction between the fixed factors and variable factors. so important in the short-run vanishes in the long-run.In the long-run all factors are variable.
Variable factor: variable factors are those factor inputs which change with the change of output in the short-run. Raw materials, labour, fuel, power etc. are the examples of variable factors. If a firm wants to expand output in the short-run, then it can employ more labourers, purchase more raw materials and can use more power. Similarly if it wants to contract, out put then it can retrench worker's, purchase less of raw materials and fuel etc. This shows that as production increases , variable factors also increase and as production falls the quantities of variable factors also fall.
It is important to note that distinction between the fixed factors and variable factors. so important in the short-run vanishes in the long-run.In the long-run all factors are variable.
Similar questions