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WHAT?: One of three basic questions of allocation (the other two are How? and For Whom?). Answering the 'What?' question of allocation determines the types and quantities of goods and services produced with society's limited resources. Should society produce hammocks or hot fudge sundaes? Computers or Cadillacs? Birdfeed or battleships? The production possibilities analysis sets the stage for answering the 'What?' question.
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                           FIXED INPUT: An input whose quantity cannot be changed in the time period under consideration. The relevant time period is usually termed the short run. The most common example of a fixed input is capital. The alternative to fixed input is variable input. A fixed input, such as capital, provides the "capacity" constraint for the short-run production of a firm. A variable input, such as labor, provides the means of changing short-run production. As larger quantities of a variable input are added to a fixed input, the variable input becomes less productive, which is the law of diminishing marginal returns. A fixed input is a resource or factor of production which cannot be changed in the short run by a firm as it seeks to change the quantity of output produced. Most firms have several fixed inputs in short-run production, especially buildings, equipment, and land. However, in the analysis of short-run production, a great deal of insight is achieved by focusing on the fixed role of capital.Short-Run Taco ProductionAs an illustration of fixed inputs, consider the short-run production of Shady Valley's favorite lunch time meal, Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers). The key fixed input for Waldo Millbottom, the owner and proprietor of Waldo's TexMex Taco World, is the restaurant and accompanying capital equipment.In the day-to-day production of TexMex Gargantuan Tacos, Waldo does not concern himself with the size of the restaurant, number of tables and chairs, amount of kitchen equipment, and available parking spaces. The quantities of these items are fixed in the short run. In the short-run, Waldo is primarily interested in having a sufficient quantity of labor--waitpersons, kitchen help, etc. Waldo alters the quantity of labor to change the quantity of production. Usually Capital, But Not AlwaysThe designation of capital as a fixed input is not just an arbitrary choice made to ease the economic exposition of short-run production. Capital is usually an input that cannot be changed quickly. If a firm wants to add a half dozen additional machinists to its workforce, it can probably do so in a few weeks. However, if a firm wants to add 50,000 square feet of factory space, then the construction company probably needs a year or two to complete this job. In terms of short-run production, labor is typically variable and capital is typically fixed.However, not all firms are typical. In some examples of short-run production, capital is the variable input and labor is the fixed input. One illustration is offered by the academic world of higher education. The labor of tenured faculty (with emphasis on "tenured") tends to be a fixed input in the production of education. By contrast, some forms of capital, especially computer equipment, are more easily changed and can be thought of as variable inputs in the production of education.
Recommended Citation:FIXED INPUT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: July 2, 2022].
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time at a crowded estate auction hoping to buy either yellow cotton balls or a set of steel-belted radial snow tires. Be on the lookout for malfunctioning pocket calculators.
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"always remember an epitaph which is in the cemetery at Tombstone, Arizona. It says: „Here lies Jack Williams. He done his damnedest.¾ I think that is the greatest epitaph a man can have ‚ When he gives everything that is in him to do the job he has before him. That is all you can ask of him and that is what I have tried to do. " -- Harry Truman, 33rd US president
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WACM
Weak Axiom of Cost Minimization
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