In 2005, Hurricane Katrina struck New Orleans as one of the worst natural disasters in the US. One year later, the country we are able to see theaftermath of the hurricane. The region has been left with destroyed homes, lost jobs, and damaged ports, causing the PPF to decrease. The Production Possibility Frontier (PPF) is a graph that shows themaximum combination of the two goods that could be produced with the current level of resources. Therefore, it is logical that if there are fewer resources, there would be an inward shift in the PPF. Theresources, or factors of production, are resources that help to produce the goods and services. They are divided into four different categories: capital, enterprise, land, and labor. Because thesefactors were affected in the hurricane, the PPF outcome is also affected.
“Thousands of people lost their jobs and were forced to move to other cities.” This is a decrease inthe factor of labor, the human factor which is the physical and mental contribution to the production. Because there are currently less people in the region, the rate of production decreases. The lawof demand states that as the price of the good or service increases, consumers are more likely to buy less, creating a negative demand curve. “Gasoline prices soared,” which according to the law ofdemand means that the demand will drop. Because less people are buying gas and other energy sources, 2.3 million people were left without power. The factor of capital includes all the man-made goodsthat are used in the production, for example the factories and machineries. Because there was an incredible drop of power in the region, they are unable to operate these factories and machineries, whichcreate a limit in the factor of capital. The hurricane has also impacted the factor of land, which involves anything that grows on and under land, as well as in the ocean and in the atmosphere. This...