# Econ - variable/fixed factor

Variable factors are inputs whose quantities vary when output changes.

Fixed factors are inputs whose quantities do not vary when output changes.

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• 7 years ago

If a change in output leads to a change in the amount of a factor, it is a variable factor. Else, it is a fixed factor.

e.g. 1

Suppose a firm employs 2 units of labour while the output is 10/unit of labour.

Now, if the output increases to 15/unit of labour but the number of labour drops to 1, then labour is still a variable factor. It is because the rise in output leads to a drop in number of labour. The drop of labour may be explained by the fact that the firm wants to raise capital (or other reasons).

e.g. 2

Suppose the rent paid by a firm is \$10000 while its output is 100. When the rent rises to \$20000 while the output remains 100, rent is regarded as a fixed cost. It is because the output does not change when the rent rises.

Conclusion:

1. change in output ->change in number of factor: variable factor

2. change in output ->no change in number of factor: fixed factor

The changes in output and the changes in number of factor are not necessarily in proportional. They can be inversely proportional.

Source(s): me