Answer to Question #205851 in Economics for Danielle

Question

Which or the following is an assumption under which the production possibilities frontier is drawn?

A) total unemployment is zero

B) the supply of resources is fixed

C) the price level is changing

D) technology is changing

Answer 1

PPF is the curve that shows the best (maximum) combinations of two outputs that an economy can produce given three assumptions:

1) Technology is fixed;

2) Resources are fixed;

3) Resources are used at their fullest.

So, the correct answer is B).