PPC Assumptions

When we learned about the economy there was one thing that stuck out to me the most, the PPC assumptions. Each assumption had me thinking about how untrue they are based on todays economy.

The first assumption is that resources are fixed. Meaning we cant increase or decrease the amount of resources available to us. This is a complete lie. When you look at todays world people are constantly buying new land, changing their businesses, and finding new ways to move forward. Which is why they say a PPC graph can be increased to set new efficiency  levels when resources are increased.

The second assumption is all resources are fully employed. This means that everything is at its maximum height when it comes to production. However, this isn't true either because products are constantly changing prices and sales depending on the customers. The Ipad Mini for example isn't selling as well because they are charging way too much. Then other versions like Sony sell the same size for less, so they will get the business.

The third assumption is only two things can be produced. This can't be though, because several large companies like Apple, Disney, and car dealerships all sell more than two products. This rule was set to make the graph easier. However, not many companies choose to sell only two products.

Finally the last assumption is that technology is fixed. Technology is constantly growing and changing. It started with the Space Race and hasn't been the same since. To say that technology is fixed is ridiculous when the Iphone five just came out with brand new technology.