Consider the following graph that plots the production possibilities frontier model for a hypothetical economy that produces only two goods: rye and microprocessors.
Which of the following is true regarding this economic model?
In order to construct such a model, an economist would need real life data regarding countries that produce only two goods.
The fact that there are only two goods produced in this theoretical economy is a simplifying assumption that still allows economists to demonstrate key economic concepts.
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.
Consider the following graph that plots the production possibilities frontier model for a hypothetical economy that produces only two goods: rye and microprocessors
100
80 60 PPF MICROPROCESSORS(Millions) 20
20
40
60
80
100
RYE(Millions of bushels)
Which of the following is true regarding this economic model?
O In order to construct such a model, an economist would need real life data regarding countries that produce only two goods
O The fact that there are only two goods produced in this theoretical economy is a simplifying assumption that still allows economists to
demonstrate key economic concepts.
O 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.