Question

Which of the following is an assumption of Production Possibility Frontier?

Options

• Resources are not fully employed

• Resources are not equally efficient for production of the two goods

• Resources are not efficiently employed

• Resources available are not fixed

Answer 1

Resources are not equally efficient for production of the two goods

Explanation:

PPF assumes resources are fixed, fully and efficiently employed, and not equally efficient in producing all goods. Thus the statement that resources are not equally efficient is an assumption.