Assume that both labor and capital exhibit diminishing returns. Suppose you can hire an additional unit of labor for $5, 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) Buy the machine, less labor

b) Nothing, because you are already minimizing cost

c) There is not enough information to make a legitimate response

d) Hire more labor, less machine