3:06 4G Done courses.aplia.com Homework Practice Assignment Chapter2 Graded Assi

Question

3:06 4G Done courses.aplia.com Homework Practice Assignment Chapter2 Graded Assignment Consider the following production possibilzies frontier model for an economy that produces only two goods: corn and blue rays. Which of the following is true regarding this economic model? The fact that there are only two goods produced in this theoretical economy, when, in reality, economies produce many more types of goods, means this model is generally useless O In order to construct such a model, an economist would need real life data regarding countries that only produce two goods The fact that there are only two goods produced in this theoretical econonmy is a simplifying assumption that still allows economists to demonstrate key economic concepts

Explanation / Answer

To draw production possibility frontier we assume two goods are prodipro. PPF is bowed outward as opportunity cost is increasing. As per the assumption there are two goods so that economy can use its scarce resources to produce these goods

Therefore the fourth option is true.

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