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 a




End of Chapter Questions
a a a



QuizaYourself

1. Scarcityaimpliesathatatheaallocationadecisionachosenabyasocietyacan
a) notamakeamoreaofaanyaoneagood.
b) alwaysamakeamoreaofaanyagood.
c) typicallyamakeamoreaofaoneagoodabutaatatheaexpenseaofamakingalessaof
aanother.

d) alwaysamakeamoreaofaallagoodsasimultaneously.aExpla
nation:aScarcityaimpliesathatachoicesainvolveatrade-offs.

AACSB:aReflectiveaThinkingaAccessi
bility:aKeyboardaNavigationaBlooms:a
Understand
Difficulty:a02aMediumaGrade
able:aautomaticaLearningaObj
ective:a01-01
Topic:aEconomicsaandaOpportunityaCost

2. Aaproductionapossibilitiesafrontieraisaaasimpleamodelaof
a) allocatingascarceainputsatoatheaproductionaofaalternativeaoutputs.
a) priceaandaproduction/consumptionainaaamarket.
b) theacostaofaproducingagoods.
c) theanumberaofainputsarequiredatoaproduceavaryingalevelsaofaoutput.a Explanation:
aTheaproductionapossibilitiesafrontierashowsatheaquantityaofatwoagoodsathatacanabeaprodu

ced.aItaimpliesathatascarcityarequiresathatachoicesabeamadeaasatoahowatoausearesources.

AACSB:aReflectiveaThinkingaAccessi
bility:aKeyboardaNavigationaBlooms:a
Understand
Difficulty:a02aMediumaGrade
able:aautomaticaLearningaObj
ective:a01-01
Topic:aModelingaOpportunityaCostaUsingatheaProductionaPossibilitiesaFrontier

,3. Theaunderlyingareasonathatathereaareaunattainableapointsaonaaaproductionapossibilitiesa
frontieraisathatathere
a. isagovernment.
b. areaalwaysachoicesathatamustabeamade.
c. areascarcearesourcesawithinaaafixedalevelaofatechnology.
d. isaunemploymentaofaresources.
Explanation:aTheapointsaoutsideatheaproductionapossibilitiesafrontieraareaunattainable.aThisa
meansathatacurrentlyaavailablearesourcesaandatechnologyaareainsufficientatoaproduceaamoun
tsagreaterathanathoseaillustratedaonatheafrontier.aOnaaagraph,aeverythingabeyondatheafrontiera
isaunattainable.

AACSB:aReflectiveaThinkingaAccessi
bility:aKeyboardaNavigationaBlooms:aR
emember
Difficulty:a01aEasyaGradeable
:aautomaticaLearningaObjectiv
e:a01-01
Topic:aModelingaOpportunityaCostaUsingatheaProductionaPossibilitiesaFrontier

4. Theaunderlyingareasonaproductionapossibilitiesafrontiersaarealikelyatoabeabowedaouta
(ratherathanalinear)aisabecause
a. choicesahaveaconsequences.
b. thereaareaalwaysaopportunityacosts.
c. somearesourcesaandapeopleacanabeabetterausedaproducingaoneagoodarather
athanaanother.

d. thereaisaalwaysasomealevelaofaunemployment.
Explanation:aIfatheaproductionapossibilitiesafrontieraisanotaaalineabutaisabowedaoutaawayafro
matheaorigin,athenaopportunityacostaisaincreasing.aTheareasonaforathisaisathataasaweaaddamore
aresourcesatoatheaproductionaof,aforaexample,apizza,aweaareausingafeweraresourcesatoaproduc

easoda.aCompoundingathataproblem,aataeachastageaasaweatakeathearesourcesaawayafromasoda
aandaputathemaintoapizza,aweaareamovingaworkersawhoaareaworseaatapizzaaproductionaandab

etteraatasodaaproductionathanathoseamovedainatheapreviousastage.aThisameansathatatheaincrea
seainapizzaaproductionaisadiminishingaandathealossainasodaaproductionaisaincreasing.aAnaeco
nomistawouldacallathisaanaexampleaofaincreasingaopportunityacost.aIfatheaproductionapossibi
litiesafrontieraisaaastraightalineathataisanotabowedaoutaawayafromatheaorigin,athenaopportunity
acostaisaconstant.



AACSB:aKnowledgeaApplicationaAcc
essibility:aKeyboardaNavigationaBloom
s:aRemember
Difficulty:a01aEasyaGradeable
:aautomaticaLearningaObjectiv
e:a01-02
Topic:aAttributesaofatheaProductionaPossibilitiesaFrontier

, 5. Supposeayouawereamodelingatheaimpactaofatheaintroductionaofacomputeraautomationai
ntoamanufacturingaonaaaproductionapossibilitiesafrontiera(PPF)awithatwoamanufacturedag
oodsaonatheirarespectiveaaxes.aItawouldabeamorealikelyathatathearesultawouldabea .
a) generalizedagrowthawithatheaPPFamovingabothaupaandatoathearight.
b) specializedagrowthawithatheaPPFamovingabothaupaandatoathearight.
c) generalizedagrowthawithatheaPPFajustamovingaupaandanotatoathearight.
d) specializedagrowthawithatheaPPFajustamovingaupaandanotatoathearight.aExplanatio
n:aComputeraautomationaisaaageneralaimprovementainatechnologyasoaitawouldaimproveaall
amanufacturing.aAsaaaresult,aitawouldaresultainageneralizedagrowthaandamoveatheaPPFabot

haupaandatoathearight.

AACSB:aKnowledgeaApplicationaAcc
essibility:aKeyboardaNavigationaBloom
s:aRemember
Difficulty:a01aEasyaGradeable
:aautomaticaLearningaObjectiv
e:a01-
03aTopic:aEconomicaGrowth

6. Theaoptimizationaassumptionasuggestsathatapeopleamake
a. irrationaladecisions.
b. unpredictableadecisions.
c. decisionsatoamakeathemselvesaasawellaoffaasapossible.
d. decisionsawithoutathinkingaveryahard.
Explanation:aTheaoptimizationaassumptionasuggestsathatatheapersonainaquestionaisatryingat
oamaximizeasomeaobjective.aConsumersaareaassumedatoabeamakingadecisionsathatamaximi
zeatheirahappinessasubjectatoaaascarceaamountaofamoney.

AACSB:aReflectiveaThinkingaAccessi
bility:aKeyboardaNavigationaBlooms:aR
emember
Difficulty:a01aEasyaGradeable
:aautomaticaLearningaObjectiv
e:a01-01
Topic:aThinkingaEconomically