The hiring of labour with fixed factor of production under short run after sometimes leads to
increase in cost only. What’s your opinion at what stage of production producer should make
addition in labour, identify which concept in economics explains the whole situation,
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Answer:
In the short run one factor of production is fixed, e.g. capital. This means that if a firm wants to increase output, it could employ more workers, but not increase capital in the short run (it takes time to expand.)
Explanation:
Fixed factors are those that do not change as output is increased or decreased, and typically include premises such as its offices and factories, and capital equipment such as machinery and computer systems.
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