Consider an economy with fixed amount of resources and given technological state. It produces only 2 goods – Good A and Good B. Different combinations showing maximum outputs of two goods which can be produced (when given resources and technology are used fully) are plotted on a graph. When all the plotted points are joined, following graph was obtained.

Based on the above graph, answer the following questions.

There was lack of skills among people because of which people were unemployed. Government introduced Kaushal Vikas Yojana for skilling the existing youth. As a result the entire workforce got skilled and got a job. What will this lead to?

Movement from E to a point on curve

The correct answer is Option 1: Movement from E to a point on curve

Since people are unemployed due to lack of skills, there is unemployment and this means the resources/factors of production of economy (labour in this case) are not fully utilized. So the economy must be at a point below the curve. Now after the skilling program, people acquired the skills and have gotten employment which leads to full employment of resources and hence this would likely lead to a movement from a point inside the PPC to a point ON the PPC line.