Final answer:
A shift to the left on the PPC reflects contraction due to increased production costs, which causes the supply curve to move left. Conversely, a rightward shift indicates growth from decreased costs or efficiency improvements, pushing the supply curve right.
Step-by-step explanation:
Regarding the question about how original production levels for two products can change as evidenced by shifts in the Production Possibilities Curve (PPC), the answer is c) Both a and b. A shift to the left represents a contraction in a firm's ability to produce, which could be caused by factors that increase costs, such as bad weather or new government regulations. This shift would be evident in the supply curve moving to the left. In contrast, a shift to the right of the PPC signifies growth and is associated with factors that reduce costs, such as a decrease in the price of key inputs or the introduction of new technologies that enhance production efficiency, leading to a rightward shift in the supply curve.
For example, if a smartphone manufacturer suddenly has access to cheaper components or invents a more efficient production process, it is likely to produce more smartphones at any given price, causing the supply curve and the PPC to shift to the right. Conversely, if that manufacturer faces higher costs of production due to increased prices for essential materials or stricter regulations, it would produce fewer smartphones at any given price, leading to a leftward shift in the supply curve and PPC.