BAe, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAe is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

Question

Quizplus · Accepted Answer

If the RAF orders one more Tornado, BAe may have to increase its production cost which will result in an increase in the opportunity cost for producing more Tornados. Therefore, the best choice is B.

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