Answer to Question #171818 in Economics of Enterprise for sophia

Question

California has been greatly affected by the forest fires of 2020. The most likely economic impact is:

an inward shift of its production possibility curve

a movement from inside its production possibility curve to the boundary

a decrease in prices of most goods because scarcity has increased

an outward shift of its production possibility curve

Answer 1

If California has been greatly affected by the forest fires of 2020, then the most likely economic impact is:

an inward shift of its production possibility curve, because the total amount of available resources decreased.

So, the correct answer is 1.