Econville suffers from a massive earthquake and tsunami that destroys a fourth of its physical resources. What happens to the production possibility frontier?
a. The production possibility frontier does not change.
b. The production possibility frontier shifts to the right.
c. The production possibility frontier shifts to the left.
d. The production possibility frontier shifts down for capital goods but does not change for consumer goods.
c. The production possibility frontier shifts to the left.
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When a market is in equilibrium, both buyers and sellers do not perceive a benefit from changing their behavior. Why?
What will be an ideal response?
One of the important points of criticism of industrial policy is that: a. it can lead to stiff competition among the domestic firms in an economy. b. small domestic firms will not be able to survive economic clustering
c. government sponsored research will end up benefitting foreign countries. d. it can prohibit regional innovations. e. the knowhow in one firm will not spill over to other firms in an economy.
A foreign discriminating monopolist is engaging in:
a. infant industry protection. b. dumping its product. c. giving preferential treatment to domestic consumers. d. charging higher prices to foreign consumers.
A natural monopoly is a market where:
A. a single firm has control over a vital natural resource. B. many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. C. a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. D. many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.