The Air Force awarded a $93 billion (or more) contract to a group led by Lockheed, Boeing, and General Dynamics to build the new fighter plane for the 21st century, the YF-22 Lightning 2. A group headed by Northrop and McDonnell Douglas, which had spent more than $1 billion on development for their alternative YF-23, lost out on the contract. That evening on CNN’s Crossfire, the Secretary of Defense explained that the Lockheed group got the contract because their “quality for the price per plane was higher.” He didn’t elaborate. In terms of the theory set forth in this chapter, did he mean?
a. The Lockheed quality was higher?
b. The Lockheed price was lower?
If neither, what did he mean?