Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?
A) The state of technology is constantly changing.
B) A wide variety of products are produced.
C) Resources are fully employed and are used in least-cost methods of production.
D) Quantities of available resources in the economy vary as we move from one point on the curve to another.

Question

Quizplus · Accepted Answer

The assumption that resources are fully employed and used in least-cost methods of production is a simplifying assumption made in constructing a production possibilities curve. This assumption allows for a clear depiction of the trade-offs between production of different goods, as resources are not being wasted or used inefficiently. The other options, such as the constantly changing state of technology or the varying quantities of available resources, may be factors affecting production in the real world, but they would complicate the construction of a simple production possibilities curve.

Which of the Following Is One of the Simplifying Assumptions