Domination Pizzas' short-run cost function is C(y, K) = 17y^2/32K+ 0.25K, where y is the number...

 

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Domination Pizzas' short-run cost function is C(y, K) = 17y^2/32K+ 0.25K, where y is the number of pizzas produced and K is the number of ovens it uses. Currently, Domination Pizzas is leasing 4 ovens in the short run. Find Domination's long run cost function. From it, establish whether Domination's technology exhibits increasing, constant, or decreasing returns to scale. Domination Pizzas' short-run cost function is C(y, K) = 17y^2/32K+ 0.25K, where y is the number of pizzas produced and K is the number of ovens it uses. Currently, Domination Pizzas is leasing 4 ovens in the short run. Find Domination's long run cost function. From it, establish whether Domination's technology exhibits increasing, constant, or decreasing returns to scale.

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To find Domination Pizzas longrun cost function we need to determine the optimal choice of the numbe... View the full answer