BAe, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high- quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes,
A) BAe and the BBC are producing at a point outside the PPF.
B) the British government is operating outside its PPF.
C) BAe and the BBC are achieving production efficiency.
D) BAe and the BBC do not face increasing opportunity costs.

Question

Quizplus · Accepted Answer

BAe and the BBC are achieving production efficiency because they are producing at the lowest possible cost on the PPF. This means they are utilizing all of their resources to their maximum potential and are not wasting any resources.

BAe, a British Defense Company, Has the Contract to Produce