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 bakery in Indore?
The oven and the shop premises are fixed factors in the short run, because their quantity cannot be altered quickly when output changes. Flour, daily casual labour and electricity used per batch are variable factors that rise and fall with the amount produced.
- AFlour used in a day's baking
- BWages paid to casual helpers hired daily
- CElectricity consumed by the ovens per batch
- DThe oven and the shop premisesCorrect
Explanation
Fixed factors cannot be changed when output changes within the short run. Ovens and premises stay constant, whereas flour, casual labour and electricity per batch vary directly with output. Hence the oven and premises are the fixed factors.
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