Solution Manual
Foundations of Business 7th Edition
by William M. Pride, All chapter 1 - 47
,Chapter 1
End of Chapter Questions
Quiz Yourself
1. Scarcity 2aimplies 2athat 2athe 2aallocation 2adecision 2achosen 2aby 2asociety
2acan
a) not 2amake 2amore 2aof 2aany 2aone 2agood.
b) always 2amake 2amore 2aof 2aany 2agood.
c) typically 2amake 2amore 2aof 2aone 2agood 2abut 2aat 2athe
2aexpense 2aof 2amaking 2aless 2aof 2aanother.
d) always 2amake 2amore 2aof 2aall 2agoods
2asimultaneously. 2aExplanation: 2aScarcity 2aimplies
2athat 2achoices 2ainvolve 2atrade-offs.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aUnderstand
Difficulty: 2a02 2aMedium
2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aEconomics 2aand 2aOpportunity 2aCost
2. A 2aproduction 2apossibilities 2afrontier 2ais 2aa 2asimple 2amodel 2aof
a) allocating 2ascarce 2ainputs 2ato 2athe 2aproduction 2aof 2aalternative
2aoutputs.
a) price 2aand 2aproduction/consumption 2ain 2aa 2amarket.
b) the 2acost 2aof 2aproducing 2agoods.
c) the 2anumber 2aof 2ainputs 2arequired 2ato 2aproduce 2avarying 2alevels
2aof 2aoutput. 2 a Explanation: 2aThe 2aproduction 2apossibilities 2afrontier
2ashows 2athe 2aquantity 2aof 2atwo 2agoods 2athat 2acan 2abe 2aproduced. 2aIt
2aimplies 2athat 2ascarcity 2arequires 2athat 2achoices 2abe 2amade 2aas 2ato
2ahow 2ato 2ause 2aresources.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aUnderstand
Difficulty: 2a02 2aMedium
,2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aModeling 2aOpportunity 2aCost 2aUsing 2athe 2aProduction 2aPossibilities
2aFrontier
, 3. The 2aunderlying 2areason 2athat 2athere 2aare 2aunattainable 2apoints 2aon 2aa
2aproduction 2apossibilities 2afrontier 2ais 2athat 2athere
a. is 2agovernment.
b. are 2aalways 2achoices 2athat 2amust 2abe 2amade.
c. are 2ascarce 2aresources 2awithin 2aa 2afixed 2alevel 2aof 2atechnology.
d. is 2aunemployment 2aof 2aresources.
Explanation: 2aThe 2apoints 2aoutside 2athe 2aproduction 2apossibilities 2afrontier
2aare 2aunattainable. 2aThis 2ameans 2athat 2acurrently 2aavailable 2aresources 2aand
2atechnology 2aare 2ainsufficient 2ato 2aproduce 2aamounts 2agreater 2athan 2athose
2aillustrated 2aon 2athe 2afrontier. 2aOn 2aa 2agraph, 2aeverything 2abeyond 2athe
2afrontier 2ais 2aunattainable.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aRemember
Difficulty: 2a01 2aEasy
2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aModeling 2aOpportunity 2aCost 2aUsing 2athe 2aProduction 2aPossibilities
2aFrontier
4. The 2aunderlying 2areason 2aproduction 2apossibilities 2afrontiers 2aare
2alikely 2ato 2abe 2abowed 2aout 2a(rather 2athan 2alinear) 2ais 2abecause
a. choices 2ahave 2aconsequences.
b. there 2aare 2aalways 2aopportunity 2acosts.
c. some 2aresources 2aand 2apeople 2acan 2abe 2abetter 2aused
2aproducing 2aone 2agood 2arather 2athan 2aanother.
d. there 2ais 2aalways 2asome 2alevel 2aof 2aunemployment.
Explanation: 2aIf 2athe 2aproduction 2apossibilities 2afrontier 2ais 2anot 2aa 2aline
2abut 2ais 2abowed 2aout 2aaway 2afrom 2athe 2aorigin, 2athen 2aopportunity 2acost
2ais 2aincreasing. 2aThe 2areason 2afor 2athis 2ais 2athat 2aas 2awe 2aadd 2amore
2aresources 2ato 2athe 2aproduction 2aof, 2afor 2aexample, 2apizza, 2awe 2aare
2ausing 2afewer 2aresources 2ato 2aproduce 2asoda. 2aCompounding 2athat
2aproblem, 2aat 2aeach 2astage 2aas 2awe 2atake 2athe 2aresources 2aaway 2afrom
2asoda 2aand 2aput 2athem 2ainto 2apizza, 2awe 2aare 2amoving 2aworkers 2awho
2aare 2aworse 2aat 2apizza 2aproduction 2aand 2abetter 2aat 2asoda 2aproduction
2athan 2athose 2amoved 2ain 2athe 2aprevious 2astage. 2aThis 2ameans 2athat 2athe
2aincrease 2ain 2apizza 2aproduction 2ais 2adiminishing 2aand 2athe 2aloss 2ain
2asoda 2aproduction 2ais 2aincreasing. 2aAn 2aeconomist 2awould 2acall 2athis 2aan
2aexample 2aof 2aincreasing 2aopportunity 2acost. 2aIf 2athe 2aproduction
2apossibilities 2afrontier 2ais 2aa 2astraight 2aline 2athat 2ais 2anot 2abowed 2aout
2aaway 2afrom 2athe 2aorigin, 2athen 2aopportunity 2acost 2ais 2aconstant.
AACSB: 2aKnowledge 2aApplication
2aAccessibility: 2aKeyboard
Foundations of Business 7th Edition
by William M. Pride, All chapter 1 - 47
,Chapter 1
End of Chapter Questions
Quiz Yourself
1. Scarcity 2aimplies 2athat 2athe 2aallocation 2adecision 2achosen 2aby 2asociety
2acan
a) not 2amake 2amore 2aof 2aany 2aone 2agood.
b) always 2amake 2amore 2aof 2aany 2agood.
c) typically 2amake 2amore 2aof 2aone 2agood 2abut 2aat 2athe
2aexpense 2aof 2amaking 2aless 2aof 2aanother.
d) always 2amake 2amore 2aof 2aall 2agoods
2asimultaneously. 2aExplanation: 2aScarcity 2aimplies
2athat 2achoices 2ainvolve 2atrade-offs.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aUnderstand
Difficulty: 2a02 2aMedium
2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aEconomics 2aand 2aOpportunity 2aCost
2. A 2aproduction 2apossibilities 2afrontier 2ais 2aa 2asimple 2amodel 2aof
a) allocating 2ascarce 2ainputs 2ato 2athe 2aproduction 2aof 2aalternative
2aoutputs.
a) price 2aand 2aproduction/consumption 2ain 2aa 2amarket.
b) the 2acost 2aof 2aproducing 2agoods.
c) the 2anumber 2aof 2ainputs 2arequired 2ato 2aproduce 2avarying 2alevels
2aof 2aoutput. 2 a Explanation: 2aThe 2aproduction 2apossibilities 2afrontier
2ashows 2athe 2aquantity 2aof 2atwo 2agoods 2athat 2acan 2abe 2aproduced. 2aIt
2aimplies 2athat 2ascarcity 2arequires 2athat 2achoices 2abe 2amade 2aas 2ato
2ahow 2ato 2ause 2aresources.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aUnderstand
Difficulty: 2a02 2aMedium
,2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aModeling 2aOpportunity 2aCost 2aUsing 2athe 2aProduction 2aPossibilities
2aFrontier
, 3. The 2aunderlying 2areason 2athat 2athere 2aare 2aunattainable 2apoints 2aon 2aa
2aproduction 2apossibilities 2afrontier 2ais 2athat 2athere
a. is 2agovernment.
b. are 2aalways 2achoices 2athat 2amust 2abe 2amade.
c. are 2ascarce 2aresources 2awithin 2aa 2afixed 2alevel 2aof 2atechnology.
d. is 2aunemployment 2aof 2aresources.
Explanation: 2aThe 2apoints 2aoutside 2athe 2aproduction 2apossibilities 2afrontier
2aare 2aunattainable. 2aThis 2ameans 2athat 2acurrently 2aavailable 2aresources 2aand
2atechnology 2aare 2ainsufficient 2ato 2aproduce 2aamounts 2agreater 2athan 2athose
2aillustrated 2aon 2athe 2afrontier. 2aOn 2aa 2agraph, 2aeverything 2abeyond 2athe
2afrontier 2ais 2aunattainable.
AACSB: 2aReflective 2aThinking
2aAccessibility: 2aKeyboard
2aNavigation 2aBlooms:
2aRemember
Difficulty: 2a01 2aEasy
2aGradeable: 2aautomatic
2aLearning 2aObjective:
2a01-01
Topic: 2aModeling 2aOpportunity 2aCost 2aUsing 2athe 2aProduction 2aPossibilities
2aFrontier
4. The 2aunderlying 2areason 2aproduction 2apossibilities 2afrontiers 2aare
2alikely 2ato 2abe 2abowed 2aout 2a(rather 2athan 2alinear) 2ais 2abecause
a. choices 2ahave 2aconsequences.
b. there 2aare 2aalways 2aopportunity 2acosts.
c. some 2aresources 2aand 2apeople 2acan 2abe 2abetter 2aused
2aproducing 2aone 2agood 2arather 2athan 2aanother.
d. there 2ais 2aalways 2asome 2alevel 2aof 2aunemployment.
Explanation: 2aIf 2athe 2aproduction 2apossibilities 2afrontier 2ais 2anot 2aa 2aline
2abut 2ais 2abowed 2aout 2aaway 2afrom 2athe 2aorigin, 2athen 2aopportunity 2acost
2ais 2aincreasing. 2aThe 2areason 2afor 2athis 2ais 2athat 2aas 2awe 2aadd 2amore
2aresources 2ato 2athe 2aproduction 2aof, 2afor 2aexample, 2apizza, 2awe 2aare
2ausing 2afewer 2aresources 2ato 2aproduce 2asoda. 2aCompounding 2athat
2aproblem, 2aat 2aeach 2astage 2aas 2awe 2atake 2athe 2aresources 2aaway 2afrom
2asoda 2aand 2aput 2athem 2ainto 2apizza, 2awe 2aare 2amoving 2aworkers 2awho
2aare 2aworse 2aat 2apizza 2aproduction 2aand 2abetter 2aat 2asoda 2aproduction
2athan 2athose 2amoved 2ain 2athe 2aprevious 2astage. 2aThis 2ameans 2athat 2athe
2aincrease 2ain 2apizza 2aproduction 2ais 2adiminishing 2aand 2athe 2aloss 2ain
2asoda 2aproduction 2ais 2aincreasing. 2aAn 2aeconomist 2awould 2acall 2athis 2aan
2aexample 2aof 2aincreasing 2aopportunity 2acost. 2aIf 2athe 2aproduction
2apossibilities 2afrontier 2ais 2aa 2astraight 2aline 2athat 2ais 2anot 2abowed 2aout
2aaway 2afrom 2athe 2aorigin, 2athen 2aopportunity 2acost 2ais 2aconstant.
AACSB: 2aKnowledge 2aApplication
2aAccessibility: 2aKeyboard
