When drawing a production possibilities frontier,which of the following is held constant?
A)The quantity of the goods and services that are produced
B)The amount of money in the economy
C)The available factors of production and the state of technology
D)The prices of goods and services
E)None of the above because nothing is held constant when drawing the production possibilities frontier.

Question

Quizplus · Accepted Answer

The available factors of production and the state of technology are held constant when drawing the production possibilities frontier. This means that the amount of labor, capital, land, and entrepreneurial ability, as well as the level of technology, are assumed to remain unchanged. The other options listed (quantity of goods and services produced, amount of money in the economy, and prices of goods and services) can all change, but the production possibilities frontier is drawn under the assumption that the factors of production and technology remain constant.

When Drawing a Production Possibilities Frontier,which of the Following Is