Explain briefly why capital is the fixed factor in the short

Assignment Help Macroeconomics

Reference no: EM1338427

In the economic theory of the firm, we generally discuss only two factors, labor and capital, and in the short run labor is the variable factor and capital is the fixed factor of production. The long run is a period of time that is long enough for all factors of production to be changed. It is not measured by the number of calendar days, but in how long it takes to change the quantity of capital used by a firm. Think of the length of time to enter an industry, for example.

(A) Briefly explain why capital is the fixed factor in the short run, and not labor. (B) Then describe (1) a business or industry where the long run is a relatively short or brief period of time and (2) another business or industry where the long run is a relatively long period of time.

Reference no: EM1338427

Questions Cloud

Explain youtube- legal and ethical considerations for user : Explain YouTube- Legal and Ethical Considerations for User Generated Content and Analyze YouTube's legal response to the allegedly legal abuses of copyright

Redeemable preferred stock : In the recent discussion memorandum, Distinguishing between Liability and Equity Instruments and Accounting for Instruments with the Characteristics of Both, the FASB addressed issue of whether redeemable preferred stock is debt or equity.

Elucidate why the fed must normally add reserves : Elucidate why the Fed must normally add reserves to the banking system via open market operations on most days in order to maintain its interest rate target in the Fed Funds market.

Give degradation affect the generation of action potentials : give degradation affect the generation of action potentials.

Explain briefly why capital is the fixed factor in the short : Explain briefly why capital is the fixed factor in the short run, and not labor.

Purpose of a problem solving meeting : Provide your thoughts on what the purpose of a problem solving meeting is and how would one be conducted?

Was the hypothesis supported and what is your conclusion : Was the hypothesis supported and What is your conclusion

Marginal cost of equity : Vertrice Industries expects to earn $400 million in after-tax income this year. Calculate what its marginal cost of equity capital will be if it must fund a capital budget of $800 million with equity capital.

Possible steps included in project closure : What are possible steps included in project closure?

User Account

All Pages