What assumption is made by the production possibility frontier model?

Question

Quizplus · Accepted Answer

The production possibility frontier model assumes that the economy produces only two products, and the model only shows the possible combinations of those two products that the economy can produce given its resources and technology. Therefore, option B is correct. Option A is incorrect because the model assumes that resources are limited. Option C is incorrect because the model only shows the combinations that are possible given the current resources and technology. Option D is incorrect because the level of technology is assumed to be fixed in the short run in this model.

What Assumption Is Made by the Production Possibility Frontier Model