Say a natural disaster strikes. People were killed but the losses were small relative to the size of the work force. However, many buildings and infrastructures have been severely damaged. I'm thinking how would such an event impact the shape of the production function. Assume the production function is of Cobb-Douglas form.
On one hand, I'm compelled to say that the production function shifted down. The labor force is still there but there are now perhaps too many people to work the reduced amount of capital, so productivity of labor decreases, shifting the function downwards.
However, I also feel like it's just a movement. The technological level remains the same. We would just move further down the function as capital decreases.
Those are my thoughts. I'm having trouble thinking this through.