A circular-flow model and production possibilities frontier are similar in that
A)neither allows economic analysis to occur.
B)neither can be represented visually on a graph.
C)both make use of assumptions.
D)both make use of complex equations to arrive at solutions.

Question

Quizplus · Accepted Answer

Both the circular-flow model and production possibilities frontier make use of certain assumptions about the economy in order to simplify and analyze economic concepts. While the circular-flow model assumes a closed economy with no government intervention, the production possibilities frontier assumes fixed resources and a constant level of technology. Both models provide a simplified framework for economic analysis.

A Circular-Flow Model and Production Possibilities Frontier Are Similar in That