To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the

monthly production quantities of their S and X models. In making this decision, the managers

A) face no trade-off because the Fremont plant only produces these two models of the many Tesla models produced worldwide.
B) face a trade-off, because producing more of one model means producing less of the other.
C) will choose to only produce the quantity of S and X models where marginal cost equals zero.
D) will always decide on production quantities in which revenues are maximized.

Answer: B