Question

In one to two sentences, explain what happens to a production possibilities curve if a natural disaster creates a scarcity of a key resource needed to make a product. Explain why this happens.(2 points)

Answer 1

If a natural disaster creates a scarcity of a key resource needed to make a product, the production possibilities curve will shift inward or to the left because the limited availability of the resource reduces the economy's ability to produce goods and services at previous levels.