If all factors of production are fixed, does that mean you cannot hire any more labour for example?
It's to do with the model of comparative advantage and its assumptions, one being the countries factors of production are fixed and another is constant returns to scale.
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What does 'fixed factors of production' mean? watch
- Thread Starter
- 14-02-2018 14:37
- 14-02-2018 16:19
I’m not sure but it may be lack of mobility which can be labor that can’t be moved overseas so this factor is fixed geographically.
- 15-02-2018 14:53
A fixed factor of production is a cost of something that is not influenced due to economies of scale. So things like building or land costs, insurance, computers, cars... e.t.c. that are all expenses.Labour is not a fixed cost, this can go up or down depending on supply and demand. The buildings cost will remain the same regardless of supply and demand.