Fixed and Variable Inputs
What are Fixed and Variable Inputs?
Written by Jason Gordon
Updated at March 15th, 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. The pizzaiolo can order more ingredients with a phone call, so ingredients would be variable inputs. The owner could hire a new person to work the counter pretty quickly as well.
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.