Question

If an economy is working at a point left to PPF curve it shows that ______.

• A. the economy is working at less than the full employment level
• B. the economy is at full employment level
• C. the economy is country is faced with excess production
• D. there is glut of imports

Answer 1

The correct option is A the economy is working at less than the full employment level

If an economy is working at a point left to PPF curve it shows that the economy is working at less than the full employment level. The PPC shifts towards the left, when there is a technological degradation and/or decrease in resources with respect to both the goods. For example, destruction of resources in an earthquake will reduce the productive capacity and as a result, PPF shifts towards the left.