what could cause such an increase.

A. Assumptions: 1. Economy is employing all available resources (Full employment). 2. Available supply of resources is fixed in quantity and quality at this point in time. 3. Technology is constant during analysis. 4. Economy produces only two types of products. a. While any two goods or services could be used, the example in the chapter assumes that one product is a consumer good (pizza), the other a capital good (industrial robots). b. Consumer goods directly satisfy wants; capital goods, which are used to produce consumer goods, indirectly satisfy wants.