Question

Distinguish between fixed factor and variable factor.

Answer 1

Sr. No.	Basis of difference	Fixed Factor	Variable Factor
1.	Meaning	A factor whose quantity cannot be changed in the short run.	A factor whose quantity can be changed in the short run.
2.	Time frame	Remains unchanged with output in the short run.	Varies directly with the level of output in the short run.
3.	Examples:	Land, building, plant, machinery.	Labor, raw materials, electricity, fuel.
4.	Cost nature	Associated with fixed cost.	Associated with variable cost.
5.	Role in production	Determines the scale of production.	Determines the volume of production.
6.	Alteration flexibility	Cannot be easily altered or replaced.	Can be increased or decreased depending on production needs.