Question

State any one assumption for the construction of the curve that shows the possibilities of potential production of two goods in an economy.

Answer 1

Explanation:

The production possibility curve is based on the following Assumptions:

(1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy.

(2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them.