Step 3: You thought. You really did. Key Assumptions.

Key Assumptions of a Production Possibilities Graph

1. Two goods are produced
2. Full Employment (FE)
   -not 100% are employed
   -not 100% productive
   -about 4% need to be unemployed
   -about 80% factory capacity is all that is in place
3. Fixed Resources - land, labor, and capital
4. Fixed State of Technology
5. No international trade