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Class 11 Micro Economics Notes · CBSE

Variable and Fixed Factors

Variable and Fixed Factors — understanding the two types of production factors and how they behave in the short run vs long run. CBSE Class 11 Microeconomics notes with comparison and examples.

Last updated: 25 Aug 2026

Notes

Variable and Fixed Factors

Class 11 Microeconomics — Understanding how production factors behave differently in the short run

Variable Factors

Variable Factors
Variable factors refer to those factors that can be changed in the short run. For example, raw material, casual labour, power, fuel, etc.
Variable factors vary directly with the level of output. As output increases, the requirement for variable factors also rises, and vice versa. Importantly, variable factors are not required in the case of zero output.
Example: A pizza restaurant needs more cheese, dough, and delivery staff when it gets more orders. If there are no orders on a Monday morning, it uses zero cheese and dough. Variable factors track your output.

Fixed Factors

Fixed Factors
Fixed factors refer to those factors that cannot be changed in the short run. For example, plant and machinery, building, land, etc.
The quantity of fixed factors remains the same in the short run irrespective of the level of output. They do not change whether the level of output rises, falls, or becomes zero.
Example: The pizza restaurant pays ₹50,000/month rent whether it sells 100 pizzas or zero. The oven, the counter, the shop space — all stay the same in the short run regardless of sales volume.

Comparison: Variable vs Fixed Factors

Variable Factors vs Fixed Factors
AspectVariable FactorsFixed Factors
MeaningFactors which can be changed in the short runFactors which cannot be changed in the short run
Relation with OutputThey vary directly with outputThey do not vary directly with output
ExampleRaw material, casual labour, power, fuelBuilding, plant and machinery, permanent staff

Worked Example — Shyam's Pen Factory

Problem

Shyam manufactures pens with the help of a machine (fixed factor). The maximum capacity of the plant is 2,000 pens. The variable factors needed to produce 2,000 pens are: 10 labourers and 100 kg of raw material. However, due to low demand, Shyam is manufacturing only 600 pens with 4 labourers and 30 kg of raw material.

Short Run Scenario

1/3

Shyam gets an additional order of 900 pens. Now, to fulfil this order, he needs to increase only the variable factors (labour and raw material) as total production 600 + 900 = 1,500 pens is still within the maximum capacity of the plant. The period needed to complete the order of 900 pens is termed as the short run.

Types of Production Function

Variable Proportion

Short Run Production Function

  • •Output is increased by changing only one input while keeping other inputs unchanged.
  • •As there is a change in the variable input only, the ratio between different inputs tends to change at different levels of output.
  • •This relationship is explained by the Law of Variable Proportions.
Constant Proportion

Long Run Production Function

  • •Output is increased by increasing all inputs simultaneously and in the same proportion.
  • •As all inputs are variable, the ratio between different inputs tends to remain the same at different levels of output.
  • •This relationship is explained by the Law of Returns to Scale.