Given the following table of long-run total costs for three different firms, which firm is most likely using the cost-minimizing combination of labor and capital?Firm A: Total Cost = 500Firm B: Total Cost = 450Firm C: Total Cost = 480Assume all firms produce the same level of output and face identical input prices.

• A. Firm C
• B. Firm A
• C. Firm B

Answer: (C)

Verified step by step guidance

1. Understand that the long-run total cost (LRTC) represents the minimum cost at which a firm can produce a given level of output when all inputs are variable.
2. Since all firms produce the same output level and face identical input prices, the firm with the lowest long-run total cost is the one that uses the cost-minimizing combination of labor and capital.
3. Compare the total costs of the three firms: Firm A has a total cost of 500, Firm B has 450, and Firm C has 480.
4. Identify the firm with the lowest total cost, which indicates the most efficient use of inputs to minimize costs.
5. Conclude that the firm with the lowest long-run total cost is the one most likely using the cost-minimizing combination of labor and capital.