what does leftward shifting of production possibility curve shows?
Answers
Answer:
The simplest way to show economic growth is to bundle all goods into two basic categories, consumer and capital goods. An outward shift of a PPF means that an economy has increased its capacity to produce
Production Possibility Curve(PPC) is a graphical curve that shows the different combination of two goods that a country or an economy can produce with limited or fixed input level.
Explanation:
In a PPC, the output level of the economy remains fixed and any combination of the two goods would yield the same level of output within that particular PPC. Now, to expand the production or output level of the economy,the productive capacity of the inputs or factor endowments has to increase as well and the PPC would shift upward or rightward. In contrast, if PPC shifts leftward,it means that the inputs or the resources in the economy are not used or utilized to their fullest potential or under-performing and the production or output level in the economy is not at the optimal level. It basically implies that the resources in the economy are under or unemployed or not fully employed and they are not being utilized according to their best productive capacity.