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

Solution Manual
Foundations of Business 7th Edition

by William M. Pride, All chapter 1 - 47

,Chapter 1 j




End of Chapter Questions
j j j




QuizjYourself

1. Scarcityjimpliesjthatjthejallocationjdecisionjchosenjbyjsocietyjcan
a) notjmakejmorejofjanyjonejgood.
b) alwaysjmakejmorejofjanyjgood.
c) typicallyjmakejmorejofjonejgoodjbutjatjthejexpensejofjmakingjlessjofjan
other.
d) alwaysjmakejmorejofjalljgoodsjsimultaneously.jExplan
ation:jScarcityjimpliesjthatjchoicesjinvolvejtrade-offs.

AACSB:jReflectivejThinkingjAccessib
ility:jKeyboardjNavigationjBlooms:jUn
derstand
Difficulty:j02jMediumjGradea
ble:jautomaticjLearningjObjec
tive:j01-01
Topic:jEconomicsjandjOpportunityjCost

2. Ajproductionjpossibilitiesjfrontierjisjajsimplejmodeljof
a) allocatingjscarcejinputsjtojthejproductionjofjalternativejoutputs.
a) pricejandjproduction/consumptionjinjajmarket.
b) thejcostjofjproducingjgoods.
c) thejnumberjofjinputsjrequiredjtojproducejvaryingjlevelsjofjoutput.j Explanation:jTh
ejproductionjpossibilitiesjfrontierjshowsjthejquantityjofjtwojgoodsjthatjcanjbejproduced.jItji
mpliesjthatjscarcityjrequiresjthatjchoicesjbejmadejasjtojhowjtojusejresources.

AACSB:jReflectivejThinkingjAccessib
ility:jKeyboardjNavigationjBlooms:jUn
derstand
Difficulty:j02jMediumjGradea
ble:jautomaticjLearningjObjec
tive:j01-01
Topic:jModelingjOpportunityjCostjUsingjthejProductionjPossibilitiesjFrontier

,3. Thejunderlyingjreasonjthatjtherejarejunattainablejpointsjonjajproductionjpossibilitiesjfro
ntierjisjthatjthere
a. isjgovernment.
b. arejalwaysjchoicesjthatjmustjbejmade.
c. arejscarcejresourcesjwithinjajfixedjleveljofjtechnology.
d. isjunemploymentjofjresources.
Explanation:jThejpointsjoutsidejthejproductionjpossibilitiesjfrontierjarejunattainable.jThisjme
ansjthatjcurrentlyjavailablejresourcesjandjtechnologyjarejinsufficientjtojproducejamountsjgre
aterjthanjthosejillustratedjonjthejfrontier.jOnjajgraph,jeverythingjbeyondjthejfrontierjisjunattai
nable.

AACSB:jReflectivejThinkingjAccessib
ility:jKeyboardjNavigationjBlooms:jRe
member
Difficulty:j01jEasyjGradeable:
jautomaticj LearningjObjective

:j01-01
Topic:jModelingjOpportunityjCostjUsingjthejProductionjPossibilitiesjFrontier

4. Thejunderlyingjreasonjproductionjpossibilitiesjfrontiersjarejlikelyjtojbejbowedjoutj(rat
herjthanjlinear)jisjbecause
a. choicesjhavejconsequences.
b. therejarejalwaysjopportunityjcosts.
c. somejresourcesjandjpeoplejcanjbejbetterjusedjproducingjonejgoodjratherjth
anjanother.
d. therejisjalwaysjsomejleveljofjunemployment.
Explanation:jIfjthejproductionjpossibilitiesjfrontierjisjnotjajlinejbutjisjbowedjoutjawayjfromjth
ejorigin,jthenjopportunityjcostjisjincreasing.jThejreasonjforjthisjisjthatjasjwejaddjmorejresource
sjtojthejproductionjof,jforjexample,jpizza,jwejarejusingjfewerjresourcesjtojproducejsoda.jCom
poundingjthatjproblem,jatjeachjstagejasjwejtakejthejresourcesjawayjfromjsodajandjputjthemjint
ojpizza,jwejarejmovingjworkersjwhojarejworsejatjpizzajproductionjandjbetterjatjsodajproducti
onjthanjthosejmovedjinjthejpreviousjstage.jThisjmeansjthatjthejincreasejinjpizzajproductionjisjd
iminishingjandjthejlossjinjsodajproductionjisjincreasing.jAnjeconomistjwouldjcalljthisjanjexa
mplejofjincreasingjopportunityjcost.jIfjthejproductionjpossibilitiesjfrontierjisjajstraightjlinejtha
tjisjnotjbowedjoutjawayjfromjthejorigin,jthenjopportunityjcostjisjconstant.

AACSB:jKnowledgejApplicationjAcce
ssibility:jKeyboardjNavigationjBlooms:j
Remember
Difficulty:j01jEasyjGradeable:
jautomaticj LearningjObjective

:j01-02
Topic:jAttributesjofjthejProductionjPossibilitiesjFrontier

, 5. Supposejyoujwerejmodelingjthejimpactjofjthejintroductionjofjcomputerjautomationjinto
jmanufacturingjonjajproductionjpossibilitiesjfrontierj(PPF)jwithjtwojmanufacturedjgoodsjo

njtheirjrespectivejaxes.jItjwouldjbejmorejlikelyjthatjthejresultjwouldjbej .
a) generalizedjgrowthjwithjthejPPFjmovingjbothjupjandjtojthejright.
b) specializedjgrowthjwithjthejPPFjmovingjbothjupjandjtojthejright.
c) generalizedjgrowthjwithjthejPPFjjustjmovingjupjandjnotjtojthejright.
d) specializedjgrowthjwithjthejPPFjjustjmovingjupjandjnotjtojthejright.jExplanation:jC
omputerjautomationjisjajgeneraljimprovementjinjtechnologyjsojitjwouldjimprovejalljmanuf
acturing.jAsjajresult,jitjwouldjresultjinjgeneralizedjgrowthjandjmovejthejPPFjbothjupjandjtojt
hejright.

AACSB:jKnowledgejApplicationjAcce
ssibility:jKeyboardjNavigationjBlooms:j
Remember
Difficulty:j01jEasyjGradeable:
jautomaticj LearningjObjective

:j01-
03jTopic:jEconomicjGrowth

6. Thejoptimizationjassumptionjsuggestsjthatjpeoplejmake
a. irrationaljdecisions.
b. unpredictablejdecisions.
c. decisionsjtojmakejthemselvesjasjwelljoffjasjpossible.
d. decisionsjwithoutjthinkingjveryjhard.
Explanation:jThejoptimizationjassumptionjsuggestsjthatjthejpersonjinjquestionjisjtryingjtojm
aximizejsomejobjective.jConsumersjarejassumedjtojbejmakingjdecisionsjthatjmaximizejtheir
jhappinessjsubjectjtojajscarcejamountjofjmoney.




AACSB:jReflectivejThinkingjAccessib
ility:jKeyboardjNavigationjBlooms:jRe
member
Difficulty:j01jEasyjGradeable:
jautomaticj LearningjObjective

:j01-01
Topic:jThinkingjEconomically