Table 12 Shows the Hypothetical Trade-Off Between Different Combinations of Stealth

question 131

Multiple Choice

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus.Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers. Table 1.2
Production Possibilities for Bombers
$$\begin{array} { | l | c | c | c | c | } \hline \text { Combination } & \begin{array} { c } \text { Number of B- } \\1 \text { Bombers }\end{array} & \begin{array} { c } \text { Opportunity } \\\text { cost(Foregone } \\\text { Stealth) }\end{array} & \begin{array} { c } \text { Number of } \\\text { Dtealth Bombers }\end{array} & \begin{array} { c } \text { Opportunity cost } \\\text { (Foregone B-1) }\end{array} \\\hline \text { A } & 20 & \text { NA } & 195 & \\\hline \text { B } & 35 & & 180 & \\\hline \text { C } & 45 & & 150 & \\\hline \mathrm { D } & 50 & & 100 &\text { NA } \\\hline\end{array}$$ The highest opportunity cost in Table 1.2 for B-1 bombers in terms of Stealth bombers is

• A)10 Stealth bombers per B-1
• B)33 B-1 bombers
• C)10 B-1 bombers
• D)10 Stealth bomber per B-1

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Definitions:

Expected Return

The projected average return on an investment, accounting for all potential outcomes and their probabilities.

Expected Market Return

The average return anticipated from an investment in a broad market index over a certain period.

Expected Return

The anticipated return on an investment based on the probabilities of possible outcomes.

Risk-Free Rate

The expected earnings from an investment that carries no risk of losing money, typically exemplified by the return on government bonds.