Chapter 10R, Problem 7MCQ

To determine

What a fixed input is

Answer to Problem 7MCQ

(c) Does not change with the output level in the short run.

Explanation of Solution

The fixed inputs are the inputs whose quantity is fixed in the short run and they do not vary with change in production, unlike variable inputs. In the long run, their quantity can change and they can be variable inputs. Hence, option (c) is correct.

Option (a) is incorrect because fixed input can be changed in long run.

Option (b) is incorrect because a fixed input is both a long-run and short-run phenomenon.

Option (d) and (e) are incorrect because marginal costs are affected by a change in variable inputs, not by fixed input.

Economics Concept Introduction

Introduction:

Fixed inputs are the inputs whose quantity is fixed in the short run. For example, Land and Machinery. Their quantity cannot be increased in the short run and thus their costs also remain fixed during the short run. It depends on the time horizon. In long run, however, their quantity can be increased.