Apu Leases 2 Squishy Machines to Produce 40 Squishies in the Short

question 142

Essay

Apu leases 2 squishy machines to produce 40 squishies in the short run. Apu's short-run cost function is: C(q, K) = 0.85
+ 0.5K, where q is the number of squishies produced and K is the number of squishy machines used. Apu's long-run cost function is: C_LR (q) = 1.13q^2/3. If Apu decides to lease 7 squishy machines, what happens to Apu's short-run average total cost of producing 40 squishies? Does Apu's long-run cost function exhibit increasing, constant, or decreasing returns to scale?

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Definitions:

Range

The difference between the highest and lowest scores in a set of data.

Median

The middle value in a dataset, dividing it into two equal parts when the data is arranged in ascending or descending order.

Median

The middle value in a data set, which separates the higher half from the lower half.

Unimodal

Refers to a distribution that has a single peak or mode.