CMA Foundation · Fundamentals of Business Economics and Management · Theory of Production
In the theory of production, which of the following is classified as a fixed factor in the short run for a garment manufacturer in Tiruppur?
The factory building and installed stitching machines are fixed factors in the short run, because their quantity cannot be altered quickly when output changes. Yarn, power and piece-rate labour can be adjusted with output, so they are variable factors.
- ACotton yarn used in stitching
- BPower consumed by running machines
- CFactory building and installed stitching machinesCorrect
- DPiece-rate workers hired for the month
Explanation
In the short run, a fixed factor cannot be changed when output changes. The factory building and installed machinery cannot be quickly expanded or reduced. Yarn, power and temporary labour vary with output, so they are variable factors.
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