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Imagine a PPF for two goods: guns and butter. A natural disaster hits and reduces our...

Imagine a PPF for two goods: guns and butter. A natural disaster hits and reduces our ability to produce both guns AND butter. What will be the effect?

The opportunity cost of producing guns will decrease

The opportunity cost of producing butter will decrease

The opportunity cost of producing butter will increase

There is not enough information to answer this question.
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Answer #1

For example, Before the disaster the economy was producing 40 guns and 80 butter, now they can produce 20 guns and 40 butter, so the opportunity cost will be same, but we don't know how disaster has actually affected the production capacity. what if butter was reduced more or guns were affected more.

the answer is "D" there is not enough information to answer this question.

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