Variable factor
Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
A variable factor is an input the firm can increase or decrease in the short run to change its output. It is usually labour, but raw materials, power and fuel are also variable. The payment for variable factors is the variable cost. It is zero when output is zero and rises as output rises. When a firm adds more of a variable factor to fixed factors, the law of variable proportions describes how output responds.
Example
A farmer with fixed land hires more workers at harvest time to raise output. A bakery buys more flour and uses more power on days it bakes more bread.
Don't confuse with
- Fixed factor: an input that cannot be changed in the short run, such as plant or land. Its cost stays the same at every output level.