Assume that both labor and capital exhibit diminishing returns. Suppose you can hire an additional unit of labor for $10, and she can product 50 units. You could also buy an additional machine at the cost of $200, and that machine would allow you to produce 1000 units.

If your main concern is minimizing average cost, what should you do?

a. There is not enough information to say.

b. Hire more labor, because it is cheaper.

c. Nothing, because you are already minimizing cost

d. Buy the machine, because it will allow you to produce more.