Which of the following is NOT an assumption of production possibilities frontier (PPF)?

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BlackTom AI · Accepted Answer

To approach this question, I’ll outline what the Production Possibilities Frontier (PPF) framework typically assumes, then evaluate each option against those assumptions.
Option a: 'Society will always be producing somewhere on the PPF.' This statement is not an assumption of the PPF. In fact, the PPF concept allows for points inside the frontier, which represent inefficiency or unemployment of resources, not just points on the frontier. Therefore this option is not an assumption and is correctly identified as NOT being an assumption.
Option b: 'There are no increases in technology.' The standard PPF model often holds technology fixed when analyzing trade-offs at a moment in time, so stating no technological progress is consistent with a basic PPF assumption. This is an assumption, not the NOT-question.
Option c: 'We live in a world with only two goods.' The classical depiction of a PPF reduces the economy to two goods to illustrate trade-offs clearly; this is indeed an assumption of the simplified PPF model. This is an assumption, not the NOT-question.
Option d: 'There is no change in available resources.' The model usually assumes fixed resources at a point in time to draw the frontier; thus this is also an assumption, not the NOT-question.
Overall, only option a contradicts the typical statement that points outside or inside the frontier are possible depending on efficiency and utilization, making it NOT an assumption of the PPF.

THC - MCD2020 - T3 - 2025 Homework Quiz 1 - Foundations of Economics and Gains from Trade

Which of the following is NOT an assumption of production possibilities frontier (PPF)?

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