### Understanding Changes in the Production Possibilities Frontier (PPF)In this exercise, we will analyze four graphs (Graph A, Graph B, Graph C, and Graph D) to determine which one best represents a change in the Production Possibilities Frontier (PPF) when the economy discovers a new deposit of oil.#### Graph Descriptions:- **Graph A**: This graph shows two downward-sloping lines. The initial PPF is the lower line, and the new PPF, after discovering the oil deposit, is the higher line. An arrow points from the lower line to the higher line, indicating an outward shift. - **Graph B**: Similar to Graph A, this graph also shows two downward-sloping lines. However, the initial PPF is the higher line, and the new PPF is the lower line. An arrow points from the higher line to the lower line, indicating an inward shift. - **Graph C**: This graph shows two downward-sloping lines intersecting each other. An arrow points from the intersection of the two lines outward, indicating that the PPF has expanded in one direction (upward and to the right) while contracting in the other direction. - **Graph D**: This graph also shows two downward-sloping lines, but in this case, the initial PPF is the higher line, and the new PPF is the lower line. An arrow points from the higher line to the lower line, indicating an inward shift.#### Exercise Question:*Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?***Options:**- A) Graph A- B) Graph B- C) Graph C- D) Graph D**Correct Answer:****A) Graph A****Explanation:**When an economy discovers a new deposit of oil, it generally results in an increase in resources, which can produce more goods and services. This increase causes an outward shift of the PPF, indicating higher production capacity. Therefore, Graph A, which shows an outward shift of the PPF, best represents this scenario.

PPF stands for production possibilities frontier. It demonstrates the several mix of two final…

Answered: Graph A Graph B Graph C Graph D Which…

Graph A Graph B Graph C Graph D Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil? A Graph A. Graph B. Graph C. Graph D.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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