Need help with Microeconomics Problem 2

Economics
Tutor: None Selected Time limit: 1 Day

Using assumption that a firm only has two inputs ( Capital and Labor) We know that in the short run at least one of those inputs must be fixed. Describe some inputs that can be fixed. 

Dec 8th, 2015

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Fixed inputs are those that takes time to adjust when a company grows. Capital is one of them. When a firm expands, it takes longer to acquire new investments. In other terms, it means that the size of the plant or factory is unlikely to change within that period of time. 

There is also technology. Technological changes depend on Research & Development outcomes or new discovery. Moreover, these technological advances have to be tested and approved for consumer use. It takes quite some time for these technological advances to be available for use. 

This period of time where some inputs are fixed is called the short run.

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Dec 8th, 2015

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