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Use practical examples from SEGOA to differentiate between short term and long run cost​

User Buzzzzjay
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In the context of SEGOA (an acronym for the five factors of production: Society, Entrepreneurship, Government, Ownership, and Ability), short-term costs refer to expenses that a business incurs in the immediate future, usually within a year or less. Long-run costs, on the other hand, refer to expenses that a business incurs over an extended period, usually more than a year.

Here are some practical examples of short-term and long-run costs in SEGOA:

Short-term costs:

- Paying rent for a retail store

- Purchasing inventory for a seasonal sale

- Hiring temporary staff for a busy period

- Paying for a one-time marketing campaign

In these examples, the expenses are incurred in the immediate future and have a direct impact on the business's current operations. They are considered short-term costs because they are typically paid within a year or less.

Long-run costs:

- Investing in new technology to improve production efficiency

- Purchasing a new retail store location

- Developing a new product line

- Training employees to acquire new skills

In these examples, the expenses are incurred over an extended period and have a direct impact on the business's future operations. They are considered long-run costs because they typically take more than a year to pay off and have a long-term impact on the business's success.

In summary, short-term costs are expenses incurred in the immediate future and have a direct impact on the business's current operations. Long-run costs, on the other hand, are expenses incurred over an extended period and have a direct impact on the business's future operations.

User JiaMing  Lin
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