In this case, you ignore the Combat Zone card completely.
... as stated on page 14 of the rulebook.
What if there are 2 players when its drawn, applying one of the effects of combat zone takes out a player and leaves just one. Would you just skip the rest of the combat zone card since its just 1 player left?
Thats what we did, we felt it kept to the spirit of the rule about skipping combat zone and saboteur if there was just 1 player left.
Like water spilled on the ground, which cannot be recovered, so we must die. But God does not take away life; instead, he devises ways so that a banished person may not remain estranged from him. 2 Sam 14:14
Would you just skip the rest of the combat zone card since its just 1 player left?
No. A player can only "give up" after ALL effects of an adventure card are resolved and before the next adventure card is revealed (page 14 - in fact it specifically references combat zone). Therefore, all of the effcts of a card, even combat zone, will be applied to the players.
Players who are knocked out then "give up" after the card effects are completed.