Essay
Apu leases 2 squishy machines to produce 40 squishies in the short run. Apu's short-run cost function is: 
where q is the number of squishies produced and K is the number of squishy machines used. Apu's long-run cost function is: 
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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