No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Essential Questions

What are the assumptions of a production possibilities frontier?

Posted on April 15, 2014 at 10:05 AM

The production possibilities model illustrates opportunity costs graphically. In this simplified model, we make the following assumptions:

1. Only two goods are produced

2. Resources are fixed

3. Technology is fixed

4. Full employment exists on the curve

5. Productive efficiency (producing at lowest cost) exists on the curve

6. Cannot produce beyond the curve in the present

7. Production inside the curve indicates that there are unemployed resources

This No Bull Review video shows you how to draw a PPC and label the key points.

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AP Macroeconomics / AP Microeconomics Unit 1 Basic Economic Concepts

Categories: AP Macroeconomics, Macro Unit 1 Basic Economic Concepts, Micro Unit 1 Basic Economic Concepts

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