Long term and short term decisions.
Explanation of Solution
Sbucks opening 75 more stores can be seen as a long run decision because all the factors of production labor and size of the plant is affected by the decision.
Sbuck is shutting down its 7,100 stores so that the baristas can receive a refresher course is a short run decision as it involves upgrading the quality of one factor of production that is the labor alone.
Replacing baristas with vending machines is seen as a short run decision as it involves changes in two factors of production, labor and one type of capital whereas other capital inputs such as land remains fixed.
Closing of 616 stores is a long run decision as it affects all factors of production of Sbucks such as labor , plant size etc.
Short run: Theshort run refers to the time period, which does not allow a change in the capital to adjust to the market situation.
Long run: Thelong run refers to the time, which changes the production variable to adjust to the market situation.
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