Solution Manual for Foundations of Business 7th Edition by William M. Pride

SolutionManual ji




FoundationsofBusiness7thEdition
ji ji ji ji ji




byWilliam M. Pride, All chapter 1 - 47
ji ji ji ji ji ji ji ji ji

,Chapter1 ji




EndofChapterQuestions
ji ji ji




Quiz Yourselfji




1. Scarcityimplies that the allocation decision chosen bysocietycan ji ji ji ji ji ji ji ji ji




a) not make more of anyone good. ji ji ji ji ji ji




b) alwaysmake more of any good. ji ji ji ji ji




c) typicallymake moreof onegoodbut attheexpenseof making less of ji ji ji ji ji ji ji ji ji ji ji ji ji




another. ji




d) always make more of all goods simultaneously. ji ji ji ji ji ji




ji Explanation:Scarcityimpliesthatchoicesinvolvetrade-offs. ji ji ji ji ji ji




AACSB: Reflective Thinking ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Understand
ji ji




Difficulty: 02 Medium ji ji




Gradeable: automatic
ji ji




LearningObjective:01-01
ji ji ji




Topic: Economics and OpportunityCost
ji ji ji ji




2. Aproduction possibilities frontieris a simple model of
ji ji ji ji ji ji ji ji




a) allocatingscarceinputs to the production of alternative outputs. ji ji ji ji ji ji ji ji




a) priceand production/consumption in a market. ji ji ji ji ji




b) the cost of producing goods. ji ji ji ji




c) the number of inputs required to produce varying levels of output. Explanation:
ji ji ji ji ji ji ji ji ji ji j i




Theproductionpossibilitiesfrontiershowsthequantityoftwo goodsthat canbeproduced. It
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




impliesthat scarcityrequiresthatchoicesbe madeasto howtouse resources.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji




AACSB: Reflective Thinking ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Understand
ji ji




Difficulty: 02 Medium ji ji




Gradeable: automatic
ji ji




LearningObjective:01-01
ji ji ji




Topic:ModelingOpportunityCost Using the Production Possibilities Frontier
ji ji ji ji ji ji ji ji

,3. Theunderlyingreasonthatthereareunattainable pointson aproductionpossibilities
ji ji ji ji ji ji ji ji ji ji ji




frontier is that there
ji ji ji ji




a. is government. ji




b. arealways choices that must be made. ji ji ji ji ji ji




c. arescarce resources within afixed level of technology. ji ji ji ji ji ji ji ji




d. isunemployment of resources. ji ji ji




Explanation:Thepointsoutsidetheproductionpossibilitiesfrontierareunattainable.This ji ji ji ji ji ji ji ji ji ji




means that currently available resources and technology are insufficient to produce amounts
ji ji ji ji ji ji ji ji ji ji ji ji




greater than those illustrated on the frontier. On a graph, everything beyond the frontier is
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




unattainable.
ji




AACSB: Reflective Thinking ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Remember
ji ji




Difficulty: 01 Easy Gradeable: ji ji ji




automatic LearningObjective:
ji ji ji




01-01
ji




Topic:Modeling OpportunityCost Using the Production Possibilities Frontier
ji ji ji ji ji ji ji ji




4. Theunderlyingreasonproductionpossibilitiesfrontiersarelikelytobe bowed out
ji ji ji ji ji ji ji ji ji ji ji




(rather than linear) is because
ji ji ji ji ji




a. choices haveconsequences. ji ji




b. there are always opportunitycosts. ji ji ji ji




c. someresourcesandpeoplecanbebetterusedproducingonegoodrather than ji ji ji ji ji ji ji ji ji ji ji ji




another. ji




d. thereis always some level of unemployment. ji ji ji ji ji ji




Explanation: If the production possibilities frontier is not a line but is bowed out away from the ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




origin, then opportunity cost is increasing. The reason for this is that as we add more resources to
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




the production of, for example, pizza, we are using fewer resources to produce soda.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji




Compounding that problem, at each stage as we take the resources away from soda and put them
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




into pizza, we are moving workers who are worse at pizza production and better at soda
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




production than those moved in the previous stage. This meansthattheincreaseinpizza
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




productionisdiminishingandthelossin sodaproduction is increasing. An economist would call
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




this an example of increasing opportunity cost. If the production possibilities frontier is a
ji ji ji ji ji ji ji ji ji ji ji ji ji ji




straight line that is not bowed out away from the origin, then opportunity cost is constant.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




AACSB: Knowledge Application ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Remember
ji ji




Difficulty: 01 Easy Gradeable: ji ji ji




automatic LearningObjective:
ji ji ji




01-02
ji




Topic: Attributes of theProduction Possibilities Frontier
ji ji ji ji ji ji

, 5. Supposeyouweremodelingtheimpactoftheintroductionofcomputerautomation into
ji ji ji ji ji ji ji ji ji ji ji ji




manufacturing on a production possibilities frontier (PPF) with two manufactured goods on
ji ji ji ji ji ji ji ji ji ji ji ji




their respective axes. It would be more likely that the result would be
ji ji ji . ji ji ji ji ji ji ji ji ji ji ji




a) generalizedgrowth with the PPF moving bothup and to the right. ji ji ji ji ji ji ji ji ji ji ji




b) specialized growth with the PPF movingboth up and to the right. ji ji ji ji ji ji ji ji ji ji ji




c) generalized growth with the PPFjust moving up and not to the right. ji ji ji ji ji ji ji ji ji ji ji ji




d) specialized growth with the PPF just moving up and not to the right. Explanation: ji ji ji ji ji ji ji ji ji ji ji ji ji




Computerautomationisageneralimprovementintechnologysoitwould improveall
ji ji ji ji ji ji ji ji ji ji ji ji ji




manufacturing.Asaresult,itwould resultingeneralizedgrowthandmove the PPF both up
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




and to the right.
ji ji ji ji




AACSB: Knowledge Application ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Remember
ji ji




Difficulty: 01 Easy Gradeable: ji ji ji




automatic LearningObjective:
ji ji ji




01-03 Topic: Economic
ji ji ji




Growth
ji




6. Theoptimization assumptionsuggests that people make
ji ji ji ji ji ji




a. irrationaldecisions. ji




b. unpredictabledecisions. ji




c. decisions to makethemselves as well off as possible. ji ji ji ji ji ji ji ji




d. decisions without thinkingveryhard. ji ji ji ji




Explanation:Theoptimizationassumptionsuggeststhatthepersoninquestionistrying to
ji ji ji ji ji ji ji ji ji ji ji ji




maximize some objective. Consumers are assumed to be making decisions that maximize
ji ji ji ji ji ji ji ji ji ji ji ji




their happiness subject to a scarce amount of money.
ji ji ji ji ji ji ji ji ji




AACSB: Reflective Thinking ji ji




Accessibility:KeyboardNavigation
ji ji ji




Blooms: Remember
ji ji




Difficulty: 01 Easy Gradeable: ji ji ji




automatic LearningObjective:
ji ji ji




01-01
ji




Topic: ThinkingEconomically
ji ji