A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital costs $100 per unit and labor $20 per unit. The last unit of capital added 50 units of output, while the last unit of labor added 20 units of output. The firm
A. is using the cost-minimizing combination of capital and labor.
B. should use more of both inputs in equal proportions.
C. could produce the same output at a lower cost by using less capital and more labor.
D. could produce the same level of output at a lower cost by using more capital and less labor.
E. should use less of both inputs in equal proportions.
Answer: C
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