A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?
A) It would shift outward because unemployment would be reduced.
B) Nothing would happen because the nation would still have the same capabilities.
C) A tradeoff would occur to replace the resources and goods destroyed.
D) It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed.
E) It would not shift because people would get to work to replace any capital that was destroyed.

Question

Quizplus · Accepted Answer

The earthquake would cause destruction and loss of resources, including infrastructure, capital, and labor. As a result, the nation's production possibilities frontier would shift inward, reducing the amount of goods and services that can be produced. There would be a tradeoff between replacing the destroyed resources and producing new goods and services, which would require reallocating resources and reducing production. The options A, B, and E are incorrect because they assume that the earthquake would have no impact or a positive effect on the nation's production possibilities, which is not the case.

A Major Earthquake Occurs in the Central Part of the United