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 achieving production efficiency.
B) BAE and the BBC are producing at a point outside the PPF.
C) the British government is operating outside its PPF.
D) BAE and the BBC do not face increasing opportunity costs.

Question

Quizplus · Accepted Answer

BAE and the BBC are achieving production efficiency by producing at the lowest possible cost. This means they are producing at a point on the PPF curve, where they are maximizing the production of both goods given their resources and technology.

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