Delhi has become the most polluted city in India. Due to this, how will the production possibility curve of Delhi be affected?

Option 1 -> Pollution reduces productive capacity, causing leftward shift.

Option 2 -> Incorrect, as pollution directly impacts production resources.

Option 3 -> Movement along curve shows reallocation, not capacity loss.

Option 4 -> Movement along curve shows reallocation, not capacity loss.

Hence, Option 1: Will shift to the left -> When pollution increases significantly, it degrades the quality and quantity of productive resources. Worker health and productivity decline, environmental resources deteriorate, and overall efficiency of factors of production decreases. This represents a reduction in the economy's total productive capacity, which is shown by an inward (leftward) shift of the entire PPC. A shift of the curve (as opposed to movement along it) occurs when there is a change in the availability or quality of resources, technology, or overall productive capacity. Since pollution damages these fundamental elements, the PPC contracts, meaning Delhi can now produce less of all goods compared to before. -> correct