A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output. The price of labor is $200 per unit and the price of capital is $100 per unit. At these input levels, another unit of labor adds 400 units to output and another unit of capital adds 600 units to output. The firm
A. is minimizing the cost of producing 2,000 units of output.
B. could produce 6 more units of output at the same cost by switching $1 from labor to capital.
C. could produce 4 more units of output at the same cost by switching $1 from labor to capital.
D. could keep output constant and reduce cost by using more capital and less labor.
E. both c and d
Answer: E
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