Why the output remains constant and cost decreases

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A producer currently hires 20 units of labor and 6 units of capital. The price per unit of labor is $10, the price per unit of capital is $2, and the marginal products of labor and capital are both equal to 20. If the producer increases labor by one unit and decreases capital by 1 unit, cost remains constant and output increases by 20 units. cost remains constant and output decreases by 20 units. output remains constant and cost increases by $8. output remains constant and cost decreases by $8.

Reference no: EM13212429

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