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

a) an outward shift of its production possibility curve

b) an inward shift of its production possibility curve

c) a movement from inside its production possibility curve to the boundary

d) a decrease in prices of most goods because scarcity has increased

2.

Which of the following statements is the least likely to be true?

a) Automation enables firms to produce goods for lower costs, through significant economies of scale.

b) Automation leads to higher labour productivity and higher profits.

c) Automation enables firms to reduce the number of their workers in the short run.

d) Automation requiring significant capital investment will bring immediate increase in short run profits.