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

Solution Manual l




Foundations of Business 7th Edition
l l l l l




by William M. Pride, All chapter 1 - 47
l l l l l l l l l

,Chapter 1 l




End of Chapter Questions
l l l




QuizlYourself

1. Scarcitylimplieslthatlthelallocationldecisionlchosenlbylsocietylcan
a) notlmakelmoreloflanylonelgood.
b) alwayslmakelmoreloflanylgood.
c) typicallylmakelmoreloflonelgoodlbutlatlthelexpenseloflmakingllessloflano
ther.
d) alwayslmakelmoreloflalllgoodslsimultaneously.lExplan
ation:lScarcitylimplieslthatlchoiceslinvolveltrade-offs.

AACSB:lReflectivelThinkinglAccessib
ility:lKeyboardlNavigationlBlooms:lUn
derstand
Difficulty:l02lMediumlGradea
ble:lautomaticlLearninglObjec
tive:l01-01
Topic:lEconomicslandlOpportunitylCost

2. Alproductionlpossibilitieslfrontierlislalsimplelmodellof
a) allocatinglscarcelinputsltolthelproductionloflalternativeloutputs.
a) pricelandlproduction/consumptionlinlalmarket.
b) thelcostloflproducinglgoods.
c) thelnumberloflinputslrequiredltolproducelvaryingllevelslofloutput.l Explanation:lTh
elproductionlpossibilitieslfrontierlshowslthelquantitylofltwolgoodslthatlcanlbelproduced.lItli
mplieslthatlscarcitylrequireslthatlchoiceslbelmadelasltolhowltoluselresources.

AACSB:lReflectivelThinkinglAccessib
ility:lKeyboardlNavigationlBlooms:lUn
derstand
Difficulty:l02lMediumlGradea
ble:lautomaticlLearninglObjec
tive:l01-01
Topic:lModelinglOpportunitylCostlUsinglthelProductionlPossibilitieslFrontier

,3. Thelunderlyinglreasonlthatltherelarelunattainablelpointslonlalproductionlpossibilitieslfro
ntierlislthatlthere
a. islgovernment.
b. arelalwayslchoiceslthatlmustlbelmade.
c. arelscarcelresourceslwithinlalfixedllevellofltechnology.
d. islunemploymentloflresources.
Explanation:lThelpointsloutsidelthelproductionlpossibilitieslfrontierlarelunattainable.lThislme
anslthatlcurrentlylavailablelresourceslandltechnologylarelinsufficientltolproducelamountslgre
aterlthanlthoselillustratedlonlthelfrontier.lOnlalgraph,leverythinglbeyondlthelfrontierlislunattai
nable.

AACSB:lReflectivelThinkinglAccessib
ility:lKeyboardlNavigationlBlooms:lRe
member
Difficulty:l01lEasylGradeable:
lautomaticl LearninglObjective

:l01-01
Topic:lModelinglOpportunitylCostlUsinglthelProductionlPossibilitieslFrontier

4. Thelunderlyinglreasonlproductionlpossibilitieslfrontierslarellikelyltolbelbowedloutl(rat
herlthanllinear)lislbecause
a. choiceslhavelconsequences.
b. therelarelalwayslopportunitylcosts.
c. somelresourceslandlpeoplelcanlbelbetterlusedlproducinglonelgoodlratherltha
nlanother.
d. therelislalwayslsomellevelloflunemployment.
Explanation:lIflthelproductionlpossibilitieslfrontierlislnotlallinelbutlislbowedloutlawaylfromlth
elorigin,lthenlopportunitylcostlislincreasing.lThelreasonlforlthislislthatlaslweladdlmorelresource
sltolthelproductionlof,lforlexample,lpizza,lwelarelusinglfewerlresourcesltolproducelsoda.lCom
poundinglthatlproblem,latleachlstagelaslweltakelthelresourceslawaylfromlsodalandlputlthemlint
olpizza,lwelarelmovinglworkerslwholarelworselatlpizzalproductionlandlbetterlatlsodalproducti
onlthanlthoselmovedlinlthelpreviouslstage.lThislmeanslthatlthelincreaselinlpizzalproductionlisld
iminishinglandlthellosslinlsodalproductionlislincreasing.lAnleconomistlwouldlcalllthislanlexa
mpleloflincreasinglopportunitylcost.lIflthelproductionlpossibilitieslfrontierlislalstraightllineltha
tlislnotlbowedloutlawaylfromlthelorigin,lthenlopportunitylcostlislconstant.

AACSB:lKnowledgelApplicationlAcce
ssibility:lKeyboardlNavigationlBlooms:l
Remember
Difficulty:l01lEasylGradeable:
lautomaticl LearninglObjective

:l01-02
Topic:lAttributesloflthelProductionlPossibilitieslFrontier

, 5. Supposelyoulwerelmodelinglthelimpactloflthelintroductionloflcomputerlautomationlinto
lmanufacturinglonlalproductionlpossibilitieslfrontierl(PPF)lwithltwolmanufacturedlgoodslo

nltheirlrespectivelaxes.lItlwouldlbelmorellikelylthatlthelresultlwouldlbel .
a) generalizedlgrowthlwithlthelPPFlmovinglbothluplandltolthelright.
b) specializedlgrowthlwithlthelPPFlmovinglbothluplandltolthelright.
c) generalizedlgrowthlwithlthelPPFljustlmovingluplandlnotltolthelright.
d) specializedlgrowthlwithlthelPPFljustlmovingluplandlnotltolthelright.lExplanation:lC
omputerlautomationlislalgenerallimprovementlinltechnologylsolitlwouldlimprovelalllmanuf
acturing.lAslalresult,litlwouldlresultlinlgeneralizedlgrowthlandlmovelthelPPFlbothluplandltolt
helright.

AACSB:lKnowledgelApplicationlAcce
ssibility:lKeyboardlNavigationlBlooms:l
Remember
Difficulty:l01lEasylGradeable:
lautomaticl LearninglObjective

:l01-
03lTopic:lEconomiclGrowth

6. Theloptimizationlassumptionlsuggestslthatlpeoplelmake
a. irrationalldecisions.
b. unpredictableldecisions.
c. decisionsltolmakelthemselveslaslwelllofflaslpossible.
d. decisionslwithoutlthinkinglverylhard.
Explanation:lTheloptimizationlassumptionlsuggestslthatlthelpersonlinlquestionlisltryingltolm
aximizelsomelobjective.lConsumerslarelassumedltolbelmakingldecisionslthatlmaximizeltheir
lhappinesslsubjectltolalscarcelamountloflmoney.




AACSB:lReflectivelThinkinglAccessib
ility:lKeyboardlNavigationlBlooms:lRe
member
Difficulty:l01lEasylGradeable:
lautomaticl LearninglObjective

:l01-01
Topic:lThinkinglEconomically