Hurricane Katrina which hit the Gulf Coast region in August 2005, resulted in ma

Question

Hurricane Katrina which hit the Gulf Coast region in August 2005, resulted in massive flooding which destroyed large sections of New Orleans. Suppose prior to this event, New Orleans was producing an output combination given by a point on its production possibilities frontier. How did the hurricane affect its production possibilities frontier?

a. New Orleans' output combination moved from a point on the frontier to a point given by one o fthe intercepts.
b. The production possibilities frontier does not shift but there is movement from a point on th e frontier to a point inside the frontier.
c. The production possibilities frontier shifts inwards.
d. The production possibilities frontier no longer exists.

Explanation / Answer

c. The production possibilities frontier shifts inwards. this is because the point of considering has been shift inward

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