Question

Using a diagram explain what happens to the PPC of Kashmir if the widespread floods have led to the destruction of human lives?

Answer 1

Production possibility curve (or PPC) is drawn on the assumption that the given resources are fully as well as efficiently utilised. If the widespread floods in Kashmir have led to the destruction of human lives, it implies the loss of manpower. This will shift the PPC leftward from $ab$ to $a_1{b}_1$, as shown in Figure.