Ask Question
29 October, 07:31

Consider the following production possibilities frontier model for an economy that produces only two goods: barley and tablets. Which of the following is true regarding this economic model? 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. This PPF is not an economic model. In order to construct such a model, an economist would need real life data regarding countries that only produce 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.

+1
Answers (1)
  1. 29 October, 09:12
    0
    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.

    Explanation:

    The purpose of economic models is not exactly to portray complex reality, but to produce insights into how it works. Creating a model with two countries that produce thousands of products would be methodologically unfeasible. Economists therefore adopt simplifications to explain concepts and create insights into how the real economy works.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Consider the following production possibilities frontier model for an economy that produces only two goods: barley and tablets. Which of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers