Fixed factor
Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
A fixed factor is an input that a firm cannot change in the short run. It is usually capital, such as plant, machinery or land. Because at least one fixed factor exists, the firm can change output in the short run only by changing its other inputs. The payment for fixed factors is the fixed cost. The firm pays it whatever its output, even at zero output.
Example
In the NCERT example, a farmer's capital is fixed at 4 units. The farmer can raise output only by adding workers. A textile mill cannot build a new factory shed overnight, so for now the shed is a fixed factor.
Don't confuse with
- Variable factor: an input the firm can change in the short run to change output, usually labour or raw materials.
- Long run: in the long run no factor is fixed. Every input can be changed.