What Are Basic Assumptions In Ppc?


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1. Human wants are unlimited.
2. The resources are limited but which has alternative uses
3. It takes into consideration the production of only two goods. However, in reality the economy will produce many goods. The life on the earth is not possible only with two goods.
4. It also assumes that the economy has utilized scarce resources efficiently and fully. In other words, the economy is in full employment.
5. PPC is drawn provided that the state of technology is given and it remains constant over the period.
6. Resources available in the economy (which are called factors of production such as land, labour, capital and organizer) are fixed and constant. However, resources can be shifted from one commodity to another.
7. The economy is not able to change the quality of the factors of production. They are also given and constant.
8. It is also assumed that the production only related to short-period rather than long period.

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