Which of the following is assumed in constructing a typical production possibilities curve?
A) The economy is using its resources inefficiently.
B) Resources are perfectly shiftable among alternative uses.
C) Production technology is fixed.
D) The economy is engaging in international trade.

Question

Quizplus · Accepted Answer

The construction of a typical production possibilities curve assumes that production technology is fixed. This means that the production possibilities curve only shows the maximum production of two goods given the current level of technology, resources, and efficiency. It does not account for changes in technology or improvements in efficiency which would shift the curve outward. The other options are not assumed in the construction of the production possibilities curve.

Which of the Following Is Assumed in Constructing a Typical