PPF Practice 2 Given the following table showing Spain's level of output of two goods: Products/Points A B C D E F G H 5 6 7 7 Economy cars(Y-axis) 0 2 3 Luxury cars (X- axis) 5 4.8 4.5 4.1 3.5 2.5 15 1.5 0 a) Graph the PPF graph and state all the points by the letters provided. b) Then label and plot the following points on the PPF: -Point J (1 economy car and 4 luxury cars) c) State which points you consider to be: -efficient/possible: -inefficient/possible: -impossible: -Point H (7 economy cars and 5 luxury cars) d) Which type of efficiency is achieved if the economy is produced at any of the following points (A, B, C, D or E)? e) Now assume that this economy makes the decision to invest in goods that are cheaper for its consumers given that a recession is nearby at which point would be ideal to produce? f) Based on this answer which type of efficiency is this economy achieving? g) By adding the answers on parts e and f which type of efficiency is being achieved and why? h) As time passed by the overall technology improvement allowed this economy to increase their level of production for both products at a rate of an additional 3 units a year excepted when there is no production. Develop and fill the new table and graph the PPF from part and add the new letters and columns such as A', B'...., etc., as well as draw an arrow indicating the direction of the shift. Products/Points A A* B B' C C D D' E F F' G G' HH Economy cars (Y-axis) 0 1 3 4 5 9 7 Luxury cars (X- axis) 5 4.8 4.5 4.1 3.5 2.5 1.5 0 Which type of shift occurred? what do we call this according to our class? And what are the two reasons why this can happen in an economy?