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

Question 124

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


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

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