Question

If an earthquake hit Japan destroying its car manufacturing plants, which graph

represents the effect it would have on their production possibilities?
A. Graph A
B. Graph C
C. Graph D
D. Graph B

Answer 1

An earthquake that destroys car manufacturing plants in Japan would cause an inward shift of the country's production possibilities curve, indicating a reduced capacity to produce cars and other goods.

Step-by-step explanation:

If an earthquake hit Japan and destroyed its car manufacturing plants, it would have a significant impact on the nation's production possibilities. In economic terms, the production possibilities curve represents the maximum potential output of a society given fixed resources. When a major event like an earthquake causes the destruction of production facilities, the curve will shift inwards because the capacity to produce goods has been decreased. In the case of Germany during the Second World War, its production possibilities curve would have shifted inwards due to the destruction of factories and loss of human capital. Therefore, when visualizing the impact on Japan's production possibilities, you should expect a similar inward shift of the production possibilities curve, indicating a reduced capacity to produce cars and other goods.