Discussion
The assumptions behind production possibility curve include:
Answer: C
The production possibility curve is drawn on the assumptions that resources are fully employed, that the quantity of resources and the state of technology are given and fixed, and that the resources are efficiently used. Full employment of the economy is therefore one of the assumptions. A variable supply of factors and continuous up-gradation of technology are changes that would shift the curve, so they are not assumptions behind a given curve, and allocating factor inputs to a single use would make the curve a point rather than a trade off between two goods. The answer is full employment of the economy, option C.
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