Foundations of Business (7th Edition) – William M. Pride – Complete Test Bank with Questions and Answers

Solution Manual m




Foundations of Business 7th Edition
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by William M. Pride, All chapter 1 - 47
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,Chapter 1 m




End of Chapter Questions
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QuizmYourself

1. Scarcitymimpliesmthatmthemallocationmdecisionmchosenmbymsocietymcan
a) notmmakemmoremofmanymonemgood.
b) alwaysmmakemmoremofmanymgood.
c) typicallymmakemmoremofmonemgoodmbutmatmthemexpensemofmmakingmless
mofmanother.

d) alwaysmmakemmoremofmallmgoodsmsimultaneously.mExp
lanation:mScarcitymimpliesmthatmchoicesminvolvemtrade-offs.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboardmNavigationmBlooms:m
Understand
Difficulty:m02mMediummGrad
eable:mautomaticmLearningmO
bjective:m01-01
Topic:mEconomicsmandmOpportunitymCost

2. Amproductionmpossibilitiesmfrontiermismamsimplemmodelmof
a) allocatingmscarceminputsmtomthemproductionmofmalternativemoutputs.
a) pricemandmproduction/consumptionminmammarket.
b) themcostmofmproducingmgoods.
c) themnumbermofminputsmrequiredmtomproducemvaryingmlevelsmofmoutput.m Explanati
on:mThemproductionmpossibilitiesmfrontiermshowsmthemquantitymofmtwomgoodsmthatmcanmbe
mproduced.m Itmimpliesmthatmscarcitymrequiresmthatmchoicesmbemmademasmtomhowmtomusemres

ources.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboardmNavigationmBlooms:m
Understand
Difficulty:m02mMediummGrad
eable:mautomaticmLearningmO
bjective:m01-01
Topic:mModelingmOpportunitymCostmUsingmthemProductionmPossibilitiesmFrontier

,3. Themunderlyingmreasonmthatmtheremaremunattainablempointsmonmamproductionmpossibiliti
esmfrontiermismthatmthere
a. ismgovernment.
b. aremalwaysmchoicesmthatmmustmbemmade.
c. aremscarcemresourcesmwithinmamfixedmlevelmofmtechnology.
d. ismunemploymentmofmresources.
Explanation:mThempointsmoutsidemthemproductionmpossibilitiesmfrontiermaremunattainable.mTh
ismmeansmthatmcurrentlymavailablemresourcesmandmtechnologymareminsufficientmtomproducema
mountsmgreatermthanmthosemillustratedmonmthemfrontier.mOnmamgraph,meverythingmbeyondmthe
mfrontiermismunattainable.




AACSB:mReflectivemThinkingmAccessi
bility:mKeyboardmNavigationmBlooms:m
Remember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-01
Topic:mModelingmOpportunitymCostmUsingmthemProductionmPossibilitiesmFrontier

4. Themunderlyingmreasonmproductionmpossibilitiesmfrontiersmaremlikelymtombembowedmo
utm(rathermthanmlinear)mismbecause
a. choicesmhavemconsequences.
b. theremaremalwaysmopportunitymcosts.
c. somemresourcesmandmpeoplemcanmbembettermusedmproducingmonemgoodmrath
ermthanmanother.
d. theremismalwaysmsomemlevelmofmunemployment.
Explanation:mIfmthemproductionmpossibilitiesmfrontiermismnotmamlinembutmismbowedmoutmawaym
frommthemorigin,mthenmopportunitymcostmismincreasing.mThemreasonmformthismismthatmasmwemad
dmmoremresourcesmtomthemproductionmof,mformexample,mpizza,mwemaremusingmfewermresource
smtomproducemsoda.mCompoundingmthatmproblem,matmeachmstagemasmwemtakemthemresourcesma
waymfrommsodamandmputmthemmintompizza,mwemaremmovingmworkersmwhomaremworsematmpizz
amproductionmandmbettermatmsodamproductionmthanmthosemmovedminmthempreviousmstage.mThi
smmeansmthatmthemincreaseminmpizzamproductionmismdiminishingmandmthemlossminmsodamproduc
tionmismincreasing.mAnmeconomistmwouldmcallmthismanmexamplemofmincreasingmopportunitymc
ost.mIfmthemproductionmpossibilitiesmfrontiermismamstraightmlinemthatmismnotmbowedmoutmawaym
frommthemorigin,mthenmopportunitymcostmismconstant.

AACSB:mKnowledgemApplicationmAcc
essibility:mKeyboardmNavigationmBloo
ms:mRemember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-02
Topic:mAttributesmofmthemProductionmPossibilitiesmFrontier

, 5. Supposemyoumweremmodelingmthemimpactmofmthemintroductionmofmcomputermautomati
onmintommanufacturingmonmamproductionmpossibilitiesmfrontierm(PPF)mwithmtwommanufact
uredmgoodsmonmtheirmrespectivemaxes.mItmwouldmbemmoremlikelymthatmthemresultmwouldmbem
.
a) generalizedmgrowthmwithmthemPPFmmovingmbothmupmandmtomthemright.
b) specializedmgrowthmwithmthemPPFmmovingmbothmupmandmtomthemright.
c) generalizedmgrowthmwithmthemPPFmjustmmovingmupmandmnotmtomthemright.
d) specializedmgrowthmwithmthemPPFmjustmmovingmupmandmnotmtomthemright.mExplana
tion:mComputermautomationmismamgeneralmimprovementminmtechnologymsomitmwouldmimpr
ovemallmmanufacturing.mAsmamresult,mitmwouldmresultminmgeneralizedmgrowthmandmmovemth
emPPFmbothmupmandmtomthemright.

AACSB:mKnowledgemApplicationmAcc
essibility:mKeyboardmNavigationmBloo
ms:mRemember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-
03mTopic:mEconomicmGrowth

6. Themoptimizationmassumptionmsuggestsmthatmpeoplemmake
a. irrationalmdecisions.
b. unpredictablemdecisions.
c. decisionsmtommakemthemselvesmasmwellmoffmasmpossible.
d. decisionsmwithoutmthinkingmverymhard.
Explanation:mThemoptimizationmassumptionmsuggestsmthatmthempersonminmquestionmismtryin
gmtommaximizemsomemobjective.mConsumersmaremassumedmtombemmakingmdecisionsmthatmm
aximizemtheirmhappinessmsubjectmtomamscarcemamountmofmmoney.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboardmNavigationmBlooms:m
Remember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-01
Topic:mThinkingmEconomically