Economics Today 18th Edition by Roger LeRoy Miller

Exercise 1

For Many App Sellers, Easy Entry Translates into Speedy Exits
Dan Cheung is a 37-year-old software engineer. Cheung had also seen statistics, such as those produced by Internet services company mobiThinking, indicating that more than 1 billion people already use digital apps. These people download at least 50 billion apps each year and pay more than $20 billion to app sellers annually.
Cheung decided to quit his regular job and start his own company to develop and sell a food- and restaurant-rating app called Spork. Cheung found that entering the ratings market with the Spork app was indeed easy, and the new company registered about 100,000 app downloads. Unfortunately, another statistic-which turned out to be relevant in Spork's case-is that one in four apps that people download to try out never get used again after the first time. Another app, called Foodspotting, offered functions similar to Spork's but was able to amass more funds for marketing and advertising. Foodspotting soon registered more than 4 million downloads and began to generate steady revenues as most customers used it multiple times. In contrast, the Spork app never generated sufficient revenues to cover Cheung's explicit costs and implicit opportunity costs. After incurring economic losses for more than a year, Cheung decided to exit the food- and restaurant-rating app business.
For Cheung's company, what period constituted the "long run"?