The economy produces only two goods or two types of goods. C PTS: 1 DIF: 2 REF: 2-1 TOP: Efficiency MSC: Definitional 90.

A. The economy produces only two goods or two types of goods. ANS: C PTS: 1 DIF: 2 REF: 2-1 TOP: Efficiency MSC: Definitional 90. When constructing a production possibilities frontier, which of the following assumptions is not made? A. The economy produces only two goods or two types of goods. B. Firms produce goods using factors of production. C. The technology available to firms is given. D. The quantities of the factors of production that are available are increasing over the relevant time period.