a country producing 2 goods x (labour intensive) and good y (capital intensive) . what will be the impact on ppc if there is a huge migration of labour to the home country from rest of the world ?
does the condition of technique of production given in question has any relevence ???
We know that a PPC is drawn for a given level of technology and for a given level of endowment (or quantity) of available resources. Hence, when there is a huge migration of labour to the home country from the rest of world, then it means that the level of available resources to India has increased, therefore, it would be reflected by a parallel outward shift of the previous/existing PPC from AB to CD. This outward shift would imply more production of goods and services.
** Note: The shape of new PPC is different from old PPC since the supply of labour has increased implying that the country can produce more amount of labour intensive goods i.e. Good Y.
** Note: The shape of new PPC is different from old PPC since the supply of labour has increased implying that the country can produce more amount of labour intensive goods i.e. Good Y.