Question

Explain briefly how the covid 19 can cause a leftwards shift in the PPF of any aconomy?

Answer 1

PPF or production possibility frontier is a curve representing different combinations of two goods produced in a country given the resources and the technology it has. All the combination of goods on the curve is possible for a country to produce, points above the curve show unattainable combinations of goods that either need more resources or technology than the country has and the points under the curve show those combinations that can be produced but the country is not utilizing its resources optimally and producing less than its potential output.

The leftward shift in PPF indicates that the output produced by an economy has decreased. Since during covid 19 outbreak, many people have lost their jobs. offices and factories have been closed and people have been staying at home for months now, the produciton/output level in all the countries have decreased. This can cause the leftward shift in the PPF of any economy (leftward shift means that an economy is producing less than its potential output).