Problem 13 What is the difference between a... [FREE SOLUTION]

Chapter 7: Problem 13

What is the difference between a fixed input and a variable input?

Short Answer

Expert verified

The main difference between a fixed input and a variable input is that fixed inputs remain constant throughout the production process, regardless of the quantity of output produced, while variable inputs change with the level of output. Examples of fixed inputs include capital resources such as buildings and machinery, while variable inputs include labor and raw materials.

Step by step solution

Definition of Fixed Input

A fixed input is an input that remains constant throughout the production process, no matter the quantity of output produced. This type of input does not change in the short run, and it usually represents the capital resources a firm uses, such as buildings, land, and machinery.

Example of Fixed Input

An example of a fixed input is a factory building. Regardless of the number of goods produced within the factory, the building remains the same and does not change. It is considered a fixed cost because it must still be paid regardless of the level of production.

Definition of Variable Input

A variable input, on the other hand, is an input that changes with the level of output produced. As production increases or decreases, the use of variable inputs also changes accordingly. Typically, variable inputs include labor and raw materials.

Example of Variable Input

An example of a variable input is the labor used in the production process. If a factory produces more goods, the company may need to hire more workers to meet the increased demand. As the level of production changes, the amount of labor used in the production process also changes. In conclusion, the main difference between a fixed input and a variable input lies in how they change with the level of output produced. Fixed inputs remain constant and do not change, while variable inputs change based on the production level. Companies must consider both types of inputs when making decisions about production levels and costs.