WHAT DOES AN INWARD SHIFT IN PRODUCTION POSSIBILITY MEANS?

The production possibilities curve, as I have explained before, shows the combination of two goods that can be produced given the current level of technology and available resources.

The production possibilities curve may shift outward when there is an advancement in technology or when there is an increase in the level of technology available to a country.

However, the production possibilities curve may also shift inward or leftward

What does inward shift in the production possibilities curve mean?

An inward or leftward shift of the production possibilities curve (PPC) means negative economic growth.

Negative economic growth means that fewer quantities of one good or both goods can now be produced.

It shows that a country's ability to produce outputs has declined.

What factors cause an inward shift in the production possibilities curve?

An inward or leftward shift in the production possibilities curve is caused by two factors, namely; a decrease in production resources and obsolete technology.

A decrease in the number of resources available to a country decreases its production possibilities and results in an inward or leftward shift in the production possibilities curve.

A decrease in the available resources may be caused by the destruction of resources by earthquakes and other natural disasters.

The second reason a production possibilities curve may shift inward is obsolete technology.

The use of outdated technology certainty decreased the productive capacity of a country and resulted in an inward or leftward shift in the production possibilities curve.

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