Society's production possibilities frontier
A)helps explain the immense complexity of the real economy
B)demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole
C)is based on unrealistic assumptions and therefore has no value as an economic tool
D)is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth
E)is based on the assumption that technology is constantly changing

Question

Quizplus · Accepted Answer

The society's production possibilities frontier is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth. While it may not capture the immense complexity of the real economy, it provides a useful framework for thinking about resource allocation and the trade-offs that society faces when making production decisions. It is a valuable economic tool because it highlights the concept of opportunity cost and how it affects the production possibilities of society.

Society's Production Possibilities Frontier