Question

An economy's production possibilities frontier:​ Select one:

a. ​is based on the assumption that technology is constantly changing.
b. ​demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole.
c. ​is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth.
d. ​helps explain the immense complexity of the real economy.
e. ​is based on unrealistic assumptions and therefore has no value as an economic tool.

Answer 1

The correct answer is c. ​is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth.

Step-by-step explanation:

The production possibilities frontier (FPP) is a graphic representation of the maximum quantities of production that an economy can obtain in a given period using all the resources it has available.

In an economy that has thousands of products, the alternatives to produce one good or another and how much of each are very large. When an alternative is chosen, it means that other possibilities are being renounced. The relationship between what we choose and what we give up is the opportunity cost.