Fixed and Variable Inputs
What are Fixed and Variable Inputs?
Written by Jason Gordon
Updated at March 26th, 2023
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What are Fixed Inputs?
We can describe inputs as either fixed or variable.
Fixed inputs are those that can’t easily be increased or decreased in a short period of time. In the pizza example, the building is a fixed input. Once the entrepreneur signs the lease, he or she is stuck in the building until the lease expires. Fixed inputs define the firm’s maximum output capacity. This is analogous to the potential real GDP shown by society’s production possibilities curve, i.e. the maximum quantities of outputs a society can produce at a given time with its available resources.
What are Variable Inputs?
Variable inputs are those that can easily be increased or decreased in a short period of time. Economists often use a short-hand form for the production function:
Q = f ⎡L, K⎤,
where L represents all the variable inputs, and K represents all the fixed inputs.
Relate Topics
- Theory of the Firm
- Capital Formation
- Rent Seeking
- Structure Conduct Performance Model
- Integration
- Co-Insurance Effect
- Conglomerates
- Cost vs Profit Center
- Accelerator Theory
- Market Structure
- Fixed Cost vs Variable Cost
- Actual vs Implicit Costs
- Explicit Costs
- True Cost Economics
- Accounting Profit
- Economic Profit
- What are Factors of Production?
- Factor Income
- Production Function
- Fixed and Variable Inputs
- Short-Run and Long-Run Production
- Short Run
- Total Product
- Marginal Product
- Value of Marginal Product
- Law of Marginal Diminishing Product
- Production Function
- Production Possibilities Frontier
- Capital
- Labor Theory of Value
- How the Production Function Estimates Inputs
- Factor Payment
- Economic Rent
- Cost Function
- Incremental Cost
- Marginal Input Cost
- Fixed and Variable Costs
- Diminishing Marginal Productivity
- Costs Relate to Diminishing Marginal Productivity
- Law of Diminishing Marginal Returns
- Average Total Cost
- Average Variable Cost
- Marginal Cost
- Average Profit or Profit Margin
- Accounting Profit
- Economic Profit
- Normal Profit
- Short and Long-Run Production
- Cost Curves
- Long-Run Average Cost (LRAC)
- Production Technologies
- Economies of Scope
- Economies of Scale
- Diseconomies of Scale
- Minimum Efficient Scale
- Increasing, Constant, and Decreasing Returns to Scale
- Shape of the Average Long-Run and Short-Run Cost Curves
- Returns to Scale
- Diseconomies of Scale
- Long-Run Average Cost Curve Affect Industry Competitors
- Technology Shifts the Long-Run Average Cost Curve
- Law of Diminishing Marginal Returns