SOLUTION MANUAL FOUNDATIONS OF BUSINESS 7TH EDITION BY
WILLIAM M. PRIDE, ALL CHAPTERS 1 - 47 COVERED QUESTIONS
AND ANSWERS GRADED A+ LATEST UPDATE.
mailto:https://www.stuvia.com/user/supergrades002
, Chapter 1
End of Chapter Questions
Quiz Yourself
1. Scarcity implies that the allocation decision chosen by society can
a) not make more of any one good.
b) always make more of any good.
c) typically make more of one good but at the expense of
making less of another.
d) always make more of all goods
simultaneously. Explanation: Scarcity implies that
choices involve trade-offs.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Understand
Difficulty: 02 Medium
Gradeable: automatic
Learning Objective: 01-01
Topic: Economics and Opportunity Cost
2. A production possibilities frontier is a simple model of
a) allocating scarce inputs to the production of alternative outputs.
a) price and production/consumption in a market.
b) the cost of producing goods.
c) the number of inputs required to produce varying levels of output.
Explanation: The production possibilities frontier shows the quantity of
two goods that can be produced. It implies that scarcity requires that
choices be made as to how to use resources.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Understand
Difficulty: 02 Medium
Gradeable: automatic
Learning Objective: 01-01
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
mailto:https://www.stuvia.com/user/supergrades002
, 3. The underlying reason that there are unattainable points on a
production possibilities frontier is that there
a. is government.
b. are always choices that must be made.
c. are scarce resources within a fixed level of technology.
d. is unemployment of resources.
Explanation: The points outside the production possibilities frontier are
unattainable. This means that currently available resources and technology
are insufficient to produce amounts greater than those illustrated on the
frontier. On a graph, everything beyond the frontier is unattainable.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-01
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
4. The underlying reason production possibilities frontiers are likely to
be bowed out (rather than linear) is because
a. choices have consequences.
b. there are always opportunity costs.
c. some resources and people can be better used producing one
good rather than another.
d. there is always some level of unemployment.
Explanation: If the production possibilities frontier is not a line but is bowed
out away from the origin, then opportunity cost is increasing. The reason
for this is that as we add more resources to the production of, for example,
pizza, we are using fewer resources to produce soda. Compounding that
problem, at each stage as we take the resources away from soda and put
them into pizza, we are moving workers who are worse at pizza production
and better at soda production than those moved in the previous stage. This
means that the increase in pizza production is diminishing and the loss in
soda production is increasing. An economist would call this an example of
increasing opportunity cost. If the production possibilities frontier is a
straight line that is not bowed out away from the origin, then opportunity
mailto:https://www.stuvia.com/user/supergrades002
, cost is constant.
AACSB: Knowledge Application
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-02
Topic: Attributes of the Production Possibilities Frontier
5. Suppose you were modeling the impact of the introduction of
computer automation into manufacturing on a production possibilities
frontier (PPF) with two manufactured goods on their respective axes. It
would be more likely that the result would be .
a) generalized growth with the PPF moving both up and to the right.
b) specialized growth with the PPF moving both up and to the right.
c) generalized growth with the PPF just moving up and not to the right.
d) specialized growth with the PPF just moving up and not to the
right. Explanation: Computer automation is a general improvement in
technology so it would improve all manufacturing. As a result, it would
result in generalized growth and move the PPF both up and to the right.
AACSB: Knowledge Application
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-03
Topic: Economic Growth
6. The optimization assumption suggests that people make
a. irrational decisions.
b. unpredictable decisions.
c. decisions to make themselves as well off as possible.
d. decisions without thinking very hard.
Explanation: The optimization assumption suggests that the person in
question is trying to maximize some objective. Consumers are assumed to
be making decisions that maximize their happiness subject to a scarce
mailto:https://www.stuvia.com/user/supergrades002
WILLIAM M. PRIDE, ALL CHAPTERS 1 - 47 COVERED QUESTIONS
AND ANSWERS GRADED A+ LATEST UPDATE.
mailto:https://www.stuvia.com/user/supergrades002
, Chapter 1
End of Chapter Questions
Quiz Yourself
1. Scarcity implies that the allocation decision chosen by society can
a) not make more of any one good.
b) always make more of any good.
c) typically make more of one good but at the expense of
making less of another.
d) always make more of all goods
simultaneously. Explanation: Scarcity implies that
choices involve trade-offs.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Understand
Difficulty: 02 Medium
Gradeable: automatic
Learning Objective: 01-01
Topic: Economics and Opportunity Cost
2. A production possibilities frontier is a simple model of
a) allocating scarce inputs to the production of alternative outputs.
a) price and production/consumption in a market.
b) the cost of producing goods.
c) the number of inputs required to produce varying levels of output.
Explanation: The production possibilities frontier shows the quantity of
two goods that can be produced. It implies that scarcity requires that
choices be made as to how to use resources.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Understand
Difficulty: 02 Medium
Gradeable: automatic
Learning Objective: 01-01
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
mailto:https://www.stuvia.com/user/supergrades002
, 3. The underlying reason that there are unattainable points on a
production possibilities frontier is that there
a. is government.
b. are always choices that must be made.
c. are scarce resources within a fixed level of technology.
d. is unemployment of resources.
Explanation: The points outside the production possibilities frontier are
unattainable. This means that currently available resources and technology
are insufficient to produce amounts greater than those illustrated on the
frontier. On a graph, everything beyond the frontier is unattainable.
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-01
Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
4. The underlying reason production possibilities frontiers are likely to
be bowed out (rather than linear) is because
a. choices have consequences.
b. there are always opportunity costs.
c. some resources and people can be better used producing one
good rather than another.
d. there is always some level of unemployment.
Explanation: If the production possibilities frontier is not a line but is bowed
out away from the origin, then opportunity cost is increasing. The reason
for this is that as we add more resources to the production of, for example,
pizza, we are using fewer resources to produce soda. Compounding that
problem, at each stage as we take the resources away from soda and put
them into pizza, we are moving workers who are worse at pizza production
and better at soda production than those moved in the previous stage. This
means that the increase in pizza production is diminishing and the loss in
soda production is increasing. An economist would call this an example of
increasing opportunity cost. If the production possibilities frontier is a
straight line that is not bowed out away from the origin, then opportunity
mailto:https://www.stuvia.com/user/supergrades002
, cost is constant.
AACSB: Knowledge Application
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-02
Topic: Attributes of the Production Possibilities Frontier
5. Suppose you were modeling the impact of the introduction of
computer automation into manufacturing on a production possibilities
frontier (PPF) with two manufactured goods on their respective axes. It
would be more likely that the result would be .
a) generalized growth with the PPF moving both up and to the right.
b) specialized growth with the PPF moving both up and to the right.
c) generalized growth with the PPF just moving up and not to the right.
d) specialized growth with the PPF just moving up and not to the
right. Explanation: Computer automation is a general improvement in
technology so it would improve all manufacturing. As a result, it would
result in generalized growth and move the PPF both up and to the right.
AACSB: Knowledge Application
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-03
Topic: Economic Growth
6. The optimization assumption suggests that people make
a. irrational decisions.
b. unpredictable decisions.
c. decisions to make themselves as well off as possible.
d. decisions without thinking very hard.
Explanation: The optimization assumption suggests that the person in
question is trying to maximize some objective. Consumers are assumed to
be making decisions that maximize their happiness subject to a scarce
mailto:https://www.stuvia.com/user/supergrades002
