wich of the following inputs wii be condidered as fixed and wich as variable over the...

wich of the following inputs wii be condidered as fixed and wich as variable over the time horizon of one month why?

a. ovens to the Nabisco bakery B. wood to the la-Z-Boy chair co. C. orange to minutes Maid Juice Co. D. Labor to Macdonal's hamburger franchise

Solutions

Expert Solution

Which of the following inputs will be considered as fixed and which as variable over the time horizon of one month why?

a. Ovens to the Nabisco bakery

It will be considered as a fixed cost. It remains constant for all levels of output. In the short period of one month the firm will not be able to purchase a new and bigger oven. The supply too can be increased in the long run only.

B. Wood to the la-Z-Boy chair co.

It should be considered as a variable cost. Wood is the input to make the chairs. According to the requirement of the chairs wood is to be procured. Hence it changes as the output changes. More variable inputs can be used in the short run to produce more.

C. Orange to minutes Maid Juice Co.

This is an example of variable cost. In the short run as per the demand of juice the oranges can be changed. More oranges mean more juice and vice versa.

D. Labor to Macdonal's hamburger franchise

Labour is always considered as a variable input. If we want increase the output we need to increase the labor only. Labour varies with the variation in the output.

Rahul Sunny answered 1 year ago

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