Asked by Michaela Pfaff on May 07, 2024
Verified
When constructing a production possibilities frontier, which of the following assumptions is not made?
A) The economy produces only two goods or two types of goods.
B) Firms produce goods using factors of production.
C) Technology does not change.
D) The quantities of the factors of production that are available are increasing over the relevant time period.
Production Possibilities Frontier
A graph that illustrates the highest potential production levels for two items, considering a specific set of resources.
Assumptions
Premises or conditions accepted as true without proof for the purpose of analysis and modeling.
- Comprehend the assumptions made when constructing economic models.
Verified Answer
KB
kandie balletdaireMay 11, 2024
Final Answer :
D
Explanation :
The assumption that the quantities of the factors of production are increasing is not made when constructing a production possibilities frontier (PPF). A PPF typically assumes that resources are fixed to demonstrate the trade-offs between producing two different goods.
Learning Objectives
- Comprehend the assumptions made when constructing economic models.