**Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?****Explanation of Graphs:**1. **Graph A:** This graph shows two production possibility frontiers (PPFs), with the lower PPF shifting inwards, indicated by an arrow pointing to the left.2. **Graph B:** This graph also shows two PPFs; however, the lower PPF is shifting outwards, indicated by an arrow pointing to the right.3. **Graph C:** This graph presents two PPFs with the inner PPF moving outward and upward, indicated by a diagonal arrow pointing up and to the left.4. **Graph D:** This graph illustrates two PPFs where the inner PPF is shifting inward, indicated by an arrow pointing downward.**Answer:**When an economy finds a new deposit of oil, its production capacity generally increases, allowing for more production of goods and services. This is typically represented by an outward shift of the production possibility frontier (PPF). Therefore, **Graph B** best represents this scenario, as it shows an outward shift of the PPF, indicating an increase in production capacity due to the discovery of new resources such as oil. **Exploring the Impact of New Oil Deposits on the Production Possibilities Frontier**In economic theory, the Production Possibility Frontier (PPF) illustrates the maximum feasible amounts of two commodities that a business can produce when those resources are allocated efficiently. Let's take a look at how finding a new deposit of oil impacts the PPF of an economy. Below are four graphs labeled Graph C and Graph D, which represent changes in the PPF. The specific question is:**Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?****Graphs:**- **Graph C:** - This graph shows an outward shift of the PPF. - The original PPF is depicted by a straight line sloping downward from left to right. - A new PPF, also a straight line, shifts outward, indicating an increase in production capability. - **Graph D:** - This graph shows an inward shift of the PPF. - The original PPF is depicted by a straight line sloping downward. - A new PPF shifts inward, representing a decrease in production capability.**Answer Options:**A. Graph A.B. Graph B.C. Graph C.D. Graph D.Finding a new deposit of oil increases the availability of resources, enabling the economy to produce more goods. This would be depicted by an outward shift in the PPF, where the new curve is outside the original curve, indicating greater production potential.Thus, the correct answer is **C. Graph C**.This change reflects an outward shift in the Production Possibilities Frontier, allowing for increased production capabilities due to the additional resources provided by the new oil deposit.

Production possibility frontier (PPF) is helpful in making economic analysis on the market condition…

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Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

**Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?**

**Explanation of Graphs:**
1. **Graph A:** This graph shows two production possibility frontiers (PPFs), with the lower PPF shifting inwards, indicated by an arrow pointing to the left.

2. **Graph B:** This graph also shows two PPFs; however, the lower PPF is shifting outwards, indicated by an arrow pointing to the right.

3. **Graph C:** This graph presents two PPFs with the inner PPF moving outward and upward, indicated by a diagonal arrow pointing up and to the left.

4. **Graph D:** This graph illustrates two PPFs where the inner PPF is shifting inward, indicated by an arrow pointing downward.

**Answer:**
When an economy finds a new deposit of oil, its production capacity generally increases, allowing for more production of goods and services. This is typically represented by an outward shift of the production possibility frontier (PPF).

Therefore, **Graph B** best represents this scenario, as it shows an outward shift of the PPF, indicating an increase in production capacity due to the discovery of new resources such as oil.

**Exploring the Impact of New Oil Deposits on the Production Possibilities Frontier**

In economic theory, the Production Possibility Frontier (PPF) illustrates the maximum feasible amounts of two commodities that a business can produce when those resources are allocated efficiently. Let's take a look at how finding a new deposit of oil impacts the PPF of an economy.

Below are four graphs labeled Graph C and Graph D, which represent changes in the PPF. The specific question is:

**Which of the above 4 graphs best represents the change in the PPF if the economy finds a new deposit of oil?**

**Graphs:**
- **Graph C:**
- This graph shows an outward shift of the PPF.
- The original PPF is depicted by a straight line sloping downward from left to right.
- A new PPF, also a straight line, shifts outward, indicating an increase in production capability.

- **Graph D:**
- This graph shows an inward shift of the PPF.
- The original PPF is depicted by a straight line sloping downward.
- A new PPF shifts inward, representing a decrease in production capability.

**Answer Options:**
A. Graph A.
B. Graph B.
C. Graph C.
D. Graph D.

Finding a new deposit of oil increases the availability of resources, enabling the economy to produce more goods. This would be depicted by an outward shift in the PPF, where the new curve is outside the original curve, indicating greater production potential.

Thus, the correct answer is **C. Graph C**.

This change reflects an outward shift in the Production Possibilities Frontier, allowing for increased production capabilities due to the additional resources provided by the new oil deposit.

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