While the managers of the restaurant are making choices concerning its operation over the next year, they are also planning for longer periods. A factor of production whose quantity can be changed during a particular period is called a variable factor of production factors such as labor and food are examples. For the restaurant, its building is a fixed factor of production for at least a year. When the quantity of a factor of production cannot be changed during a particular period, it is called a fixed factor of production. Other factors of production could be changed during the year, but the size of the building must be regarded as a constant. Decisions concerning the operation of the restaurant during the next year must assume the building will remain unchanged. It would take at least that much time to find a new building or to expand or reduce the size of its present facility. For example, a restaurant may regard its building as a fixed factor over a period of at least the next year. The short run in this microeconomic context is a planning period over which the managers of a firm must consider one or more of their factors of production as fixed in quantity. Our analysis of production and cost begins with a period economists call the short run.
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