Long term and short term decisions.
Explanation of Solution
Laying off 44,000 retail workers in 2016 and scaling back premiere locations by the M’s store can be seen as a short run decision because only one factor of production, which is the labor is affected by the decision.
W store is shutting down its 629 stores and Amzn Company and other online retailers expanding can be seen as long run decisions as it affects all the factors of production. For instance, shutting down the retail stores implies a reduction in the size of all the factors of production say labor, capital and so on. Moreover, closing 15 percent department store without another job offer to closed store employees is also a long run decision as it affects all the factors of production.
Short run: The short run refers to the time period, which does not allow a change in the capital to adjust to the market situation.
Long run: The long run refers to the time, which changes the production variable to adjust to the market situation.
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Chapter 11 Solutions
Macroeconomics
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