What oversimplified assumption dose the graph make about number of types of production the society produces?
Answers
The four key assumptions deals with the production possibilities analysis are as given below:
(1) resources are utilised to produce single good or both the two goods,
(2) the quantities of the resources is fixed and does not vary,
(3) technology and production techniques are fixed,
(4) resources are used in a technically feasible pattern only.
Techno economic study of the alternative paring of two goods that can be economically produced with existing resources and technology are carried out to finalise production possibilities.
Time schedule should be strictly adhere to as specified by the business house.
Like any economic feasibility study , production possibilities analysis is carried out to avail feasibility of the project builds on certain preconditions or assumptions.