Answers
Shift to the left
• The country is hit by a natural disaster that destroys its infrastructure
• There is an acute shortage of teachers in several of the country’s states
A shift to the Right
• The government starts 50 new medical clinics in rural areas.
• Seven computer hardware companies set up new manufacturing units in the country
Explanation
Production possibilities Curve (PPC) commonly shift due to changes in technology or due to growth in the economy. When more goods are produced due to technological change, ceteris paribus, a shift to the right occurs. This shift can also occur when the economy grows to allow more production of capital and customer goods.
When a natural disaster happens, it might hit factors of productions which are vital inputs to the economy. This will lower production in the economy. For example, a Tsunami occurrence reduces the size of inputs that were used in the economy to produce the outputs thus the PPC will shift to the left.
