Question

Justify the following in brief:

Capital is an immobile factor in the short run.

Answer 1

Capital is considered an immobile factor in the short run due to the fixed nature of physical assets and the time and costs involved in moving or repurposing them. Capital typically refers to assets such as machinery, buildings, equipment, and infrastructure that are used in the production of goods and services. These assets are usually tied to specific industries, locations, and production processes, making them difficult to alter or move over a short period.

For example, a factory or plant is usually built in a specific location to serve a particular production process. In the short run, it's nearly impossible to move this factory to a new location or repurpose it for a completely different production line without incurring significant costs and delays. Similarly, specialized machinery designed for a specific task cannot be easily adapted to perform a different function, which makes it difficult to redeploy capital quickly in response to changes in demand or market conditions.

This immobility contrasts with labor, which is more flexible and mobile. Workers can move between jobs, companies, or even industries with relatively less time and cost. In contrast, capital investments, such as heavy machinery or buildings, require substantial effort, time, and financial resources to relocate or reconfigure. These factors create a rigidity in the allocation of capital in the short term.