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Suppose a Hurricane Causes Extensive Devastation, Destroying Houses, Roads, Schools

Question 99

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Suppose a hurricane causes extensive devastation, destroying houses, roads, schools and factories. What would be the effect of this hurricane on a production possibilities frontier consisting of consumption goods and capital goods?


A) It would shift outward at all points.
B) It would shift inward at all points.
C) There would be a movement along the existing production possibilities frontier towards a less capital-intensive point.
D) There would be a movement along the existing production possibilities frontier towards a more capital-intensive point.
E) There would be a movement from the existing production possibilities frontier inwards towards a point with unused or misallocated resources.

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