Question

Gilberto's Performance Pizza is a small restaurant in Chicago that sells gluten-free pizzas. Gilberto's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Gilberto signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Gilberto's kitchen cannot fit more than two ovens, Gilberto cannot change the number of ovens he uses in his production of pizzas in the short run.

However, Gilberto's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Gilberto lets them know how many workers he needs for each day of the week. In the short run, these workers are ________ inputs, and the ovens ________ inputs.

Answer 1

However, Gilberto's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Gilberto lets them know how many workers he needs for each day of the week. In the short run, these workers are VARIABLE inputs, and the ovens FIXED inputs.

Step-by-step explanation:

In the long run, all inputs are variable. E.g. in 5 years Gilberto might build his own pizza place and he will be able to make the kitchen as large as he wants.

But in the short run, some inputs are variable because they can be changed immediately, e.g. the number of workers changes on a weekly basis. While other inputs are fixed, and cannot be changed, e.g. Gilberto has a two yer lease contract for the ovens, so he will continue to use these ovens until the lease expires (in 2 years).

The long run and short doesn't depend on time, but on the ability of being able to change the inputs consumed by a business. The long run might represent 10 years for a company that signed a 10 year lease contract.