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Fact 11.1.2 A Bakery on the Rise
Some 500 customers a day line up to buy Avalon's breads, scones, muffins, and coffee. Staffing and management are worries. Avalon now employs 35 and plans to hire 15 more. Its payroll will climb by 30 percent to 40 percent. The new CEO has executed an ambitious agenda that includes the move to a larger space, which will increase the rent from $3,500 to $10,000 a month.
Source: Fortune, April 14, 2008
-Refer to Fact 11.1.2. Avalon's decision to ________ is a short-run decision. Avalon's decision to ________ is a long-run decision.
A)serve 500 customers a day; hire 15 more people
B)move to a larger space; hire 15 more people
C)hire 15 more people; serve 500 customers a day
D)hire 15 more people; move to a larger space
E)pay more for rent; have a larger payroll

Question

Quizplus · Accepted Answer

Hiring 15 more people is a short-run decision as it involves adjusting labor, which can be changed relatively quickly. Moving to a larger space is a long-run decision as it involves changing the scale of operations, which requires more time and planning.

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