alleryStart learning →The reason capital is treated as the fixed input in the short run is that it:
AProduces no output
BIs always rented
CCannot be varied quickly
DCosts nothing to buy
Answer & Solution
Correct answer: C. Cannot be varied quickly
1. Fixed and variable are defined by how quickly an input can be changed.
2. Fixed costs are the costs of the fixed inputs, such as capital.
3. A firm can hire or release labour far faster than it can build or sell a factory.
4. Short run costs are therefore different from long run costs.
5. In the long run even capital becomes variable, which is what defines the long run.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 7 'Production, Costs and Industry Structure', sections 7.1-7.4_
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