Which of the following are assumptions underlying the PPC?

Price determine the position on the PPC

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Technology, population, and capital are variable

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Only two goods are produced

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All of above

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Solution

The correct option is B Only two goods are produced
The four key assumptions underlying production possibilities analysis are:
(1) resources are used to produce one or both of only two goods,
(2) the quantities of the resources do not change,
(3) technology and production techniques do not change, and
(4) resources are used in a technically efficient way.
Hence option ‘c’ is true.

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