Solution Manual for Foundations of Business 7th
Edition by William M. Pride2026-2027 | Complete
Chapter Solutions, Business Concepts Review & Verified
Answers
All chapters covered
, SOLUTION MANUAL FOR f f
Foundations of Business 7e William M. Pride; f f f f f f
Chapter 1-47 f
Chapter1 f
End of Chapter Questions
f f f
Quiz Yourselff
1. Scarcity implies that the allocation decision chosen by society can
f f f f f f f f f
a) not make more of any one good. f f f f f f
b) always make more of any good. f f f f f
c) typically make more of one good but at the expense of making less of f f f f f f f f f f f f f
another. f
d) always make more of all goods simultaneously. f f f f f f
f Explanation: Scarcity implies that choices involve trade-offs. f f f f f f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Understand
f f
Difficulty: 02 Medium f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Economics and Opportunity Cost
f f f f
2. A production possibilities frontier is a simple model of
f f f f f f f f
a) allocating scarce inputs to the production of alternative outputs. f f f f f f f f
a) price and production/consumption in a market. f f f f f
b) the cost of producing goods. f f f f
c) the number of inputs required to produce varying levels of output. Explanation:
f f f f f f f f f f f
The production possibilities frontier shows the quantity of two goods thatcan be produced.
f f f f f f f f f f f f f f
It implies that scarcity requires that choices be made as to how to useresources.
f f f f f f f f f f f f f f f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Understand
f f
Difficulty: 02 Medium f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
f f f f f f f f
https://www.stuvia.com/user/registerednurse
, 3. The underlying reason that there are unattainable points on a production possibilities
f f f f f f f f f f f
frontier is that there
f f f f
a. is government. f
b. are always choices that must be made. f f f f f f
c. are scarce resources within a fixed level of technology. f f f f f f f f
d. is unemployment of resources. f f f
Explanation: The points outside the production possibilities frontier are unattainable. This
f f f f f f f f f f
means that currently available resources and technology are insufficient to produce amounts
f f f f f f f f f f f f
greater than those illustrated on the frontier. On a graph, everything beyond the frontier is
f f f f f f f f f f f f f f f
unattainable.
f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
f f f f f f f f
4. The underlying reason production possibilities frontiers are likely to be bowed out
f f f f f f f f f f f
(rather than linear) is because
f f f f f
a. choices have consequences. f f
b. there are always opportunity costs. f f f f
c. some resources and people can be better used producing one good rather f f f f f f f f f f f
than another. f f
d. there is always some level of unemployment. f f f f f f
Explanation: If the production possibilities frontier is not a line but is bowed out away from the
f f f f f f f f f f f f f f f f
origin, then opportunity cost is increasing. The reason for this is that as we add more resources
f f f f f f f f f f f f f f f f f
to the production of, for example, pizza, we are using fewer resources to produce soda.
f f f f f f f f f f f f f f f
Compounding that problem, at each stage as we take the resources away from soda and put
f f f f f f f f f f f f f f f f
them into pizza, we are moving workers who are worse at pizza production and better at soda
f f f f f f f f f f f f f f f f f
production than those moved in the previous stage. This means that the increase in pizza
f f f f f f f f f f f f f f f
production is diminishing and the loss in soda productionis increasing. An economist would
f f f f f f f f f f f f f f
call this an example of increasing opportunity cost. If the production possibilities frontier is a
f f f f f f f f f f f f f f f
straight line that is not bowed out away from the origin, then opportunity cost is constant.
f f f f f f f f f f f f f f f f
AACSB: Knowledge Application f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-02
f f f
Topic: Attributes of the Production Possibilities Frontier
f f f f f f
https://www.stuvia.com/user/registerednurse
, 5. Suppose you were modeling the impact of the introduction of computer automationinto
f f f f f f f f f f f f
manufacturing on a production possibilities frontier (PPF) with two manufactured goods on
f f f f f f f f f f f f
their respective axes. It would be more likely that the result would be
f f f . f f f f f f f f f f
a) generalized growth with the PPF moving both up and to the right. f f f f f f f f f f f
b) specialized growth with the PPF moving both up and to the right. f f f f f f f f f f f
c) generalized growth with the PPF just moving up and not to the right. f f f f f f f f f f f f
d) specialized growth with the PPF just moving up and not to the right. Explanation: f f f f f f f f f f f f f
Computer automation is a general improvement in technology so it wouldimprove all
f f f f f f f f f f f f f
manufacturing. As a result, it would result in generalized growth and movethe PPF both up
f f f f f f f f f f f f f f f f
and to the right.
f f f f
AACSB: Knowledge Application
f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-03
f f f
Topic: Economic Growth
f f f
6. The optimization assumption suggests that people make
f f f f f f
a. irrational decisions. f
b. unpredictable decisions. f
c. decisions to make themselves as well off as possible. f f f f f f f f
d. decisions without thinking very hard. f f f f
Explanation: The optimization assumption suggests that the person in question is tryingto
f f f f f f f f f f f f
maximize some objective. Consumers are assumed to be making decisions that maximize
f f f f f f f f f f f f
their happiness subject to a scarce amount of money.
f f f f f f f f f
AACSB: Reflective Thinking
f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Thinking Economically
f f
https://www.stuvia.com/user/registerednurse
Edition by William M. Pride2026-2027 | Complete
Chapter Solutions, Business Concepts Review & Verified
Answers
All chapters covered
, SOLUTION MANUAL FOR f f
Foundations of Business 7e William M. Pride; f f f f f f
Chapter 1-47 f
Chapter1 f
End of Chapter Questions
f f f
Quiz Yourselff
1. Scarcity implies that the allocation decision chosen by society can
f f f f f f f f f
a) not make more of any one good. f f f f f f
b) always make more of any good. f f f f f
c) typically make more of one good but at the expense of making less of f f f f f f f f f f f f f
another. f
d) always make more of all goods simultaneously. f f f f f f
f Explanation: Scarcity implies that choices involve trade-offs. f f f f f f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Understand
f f
Difficulty: 02 Medium f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Economics and Opportunity Cost
f f f f
2. A production possibilities frontier is a simple model of
f f f f f f f f
a) allocating scarce inputs to the production of alternative outputs. f f f f f f f f
a) price and production/consumption in a market. f f f f f
b) the cost of producing goods. f f f f
c) the number of inputs required to produce varying levels of output. Explanation:
f f f f f f f f f f f
The production possibilities frontier shows the quantity of two goods thatcan be produced.
f f f f f f f f f f f f f f
It implies that scarcity requires that choices be made as to how to useresources.
f f f f f f f f f f f f f f f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Understand
f f
Difficulty: 02 Medium f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
f f f f f f f f
https://www.stuvia.com/user/registerednurse
, 3. The underlying reason that there are unattainable points on a production possibilities
f f f f f f f f f f f
frontier is that there
f f f f
a. is government. f
b. are always choices that must be made. f f f f f f
c. are scarce resources within a fixed level of technology. f f f f f f f f
d. is unemployment of resources. f f f
Explanation: The points outside the production possibilities frontier are unattainable. This
f f f f f f f f f f
means that currently available resources and technology are insufficient to produce amounts
f f f f f f f f f f f f
greater than those illustrated on the frontier. On a graph, everything beyond the frontier is
f f f f f f f f f f f f f f f
unattainable.
f
AACSB: Reflective Thinking f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
f f f f f f f f
4. The underlying reason production possibilities frontiers are likely to be bowed out
f f f f f f f f f f f
(rather than linear) is because
f f f f f
a. choices have consequences. f f
b. there are always opportunity costs. f f f f
c. some resources and people can be better used producing one good rather f f f f f f f f f f f
than another. f f
d. there is always some level of unemployment. f f f f f f
Explanation: If the production possibilities frontier is not a line but is bowed out away from the
f f f f f f f f f f f f f f f f
origin, then opportunity cost is increasing. The reason for this is that as we add more resources
f f f f f f f f f f f f f f f f f
to the production of, for example, pizza, we are using fewer resources to produce soda.
f f f f f f f f f f f f f f f
Compounding that problem, at each stage as we take the resources away from soda and put
f f f f f f f f f f f f f f f f
them into pizza, we are moving workers who are worse at pizza production and better at soda
f f f f f f f f f f f f f f f f f
production than those moved in the previous stage. This means that the increase in pizza
f f f f f f f f f f f f f f f
production is diminishing and the loss in soda productionis increasing. An economist would
f f f f f f f f f f f f f f
call this an example of increasing opportunity cost. If the production possibilities frontier is a
f f f f f f f f f f f f f f f
straight line that is not bowed out away from the origin, then opportunity cost is constant.
f f f f f f f f f f f f f f f f
AACSB: Knowledge Application f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-02
f f f
Topic: Attributes of the Production Possibilities Frontier
f f f f f f
https://www.stuvia.com/user/registerednurse
, 5. Suppose you were modeling the impact of the introduction of computer automationinto
f f f f f f f f f f f f
manufacturing on a production possibilities frontier (PPF) with two manufactured goods on
f f f f f f f f f f f f
their respective axes. It would be more likely that the result would be
f f f . f f f f f f f f f f
a) generalized growth with the PPF moving both up and to the right. f f f f f f f f f f f
b) specialized growth with the PPF moving both up and to the right. f f f f f f f f f f f
c) generalized growth with the PPF just moving up and not to the right. f f f f f f f f f f f f
d) specialized growth with the PPF just moving up and not to the right. Explanation: f f f f f f f f f f f f f
Computer automation is a general improvement in technology so it wouldimprove all
f f f f f f f f f f f f f
manufacturing. As a result, it would result in generalized growth and movethe PPF both up
f f f f f f f f f f f f f f f f
and to the right.
f f f f
AACSB: Knowledge Application
f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-03
f f f
Topic: Economic Growth
f f f
6. The optimization assumption suggests that people make
f f f f f f
a. irrational decisions. f
b. unpredictable decisions. f
c. decisions to make themselves as well off as possible. f f f f f f f f
d. decisions without thinking very hard. f f f f
Explanation: The optimization assumption suggests that the person in question is tryingto
f f f f f f f f f f f f
maximize some objective. Consumers are assumed to be making decisions that maximize
f f f f f f f f f f f f
their happiness subject to a scarce amount of money.
f f f f f f f f f
AACSB: Reflective Thinking
f f
Accessibility: Keyboard Navigation
f f f
Blooms: Remember
f f
Difficulty: 01 Easy f f
Gradeable: automatic
f f
LearningObjective:01-01
f f f
Topic: Thinking Economically
f f
https://www.stuvia.com/user/registerednurse
