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 xr




End of Chapter Questions
xr xr xr



QuizxrYourself

1. Scarcityxrimpliesxrthatxrthexrallocationxrdecisionxrchosenxrbyxrsocietyxrcan
a) notxrmakexrmorexrofxranyxronexrgood.
b) alwaysxrmakexrmorexrofxranyxrgood.
c) typicallyxrmakexrmorexrofxronexrgoodxrbutxratxrthexrexpensexrofxrmakingxr
lessxrofxranother.
d) alwaysxrmakexrmorexrofxrallxrgoodsxrsimultaneously.xrE
xplanation:xrScarcityxrimpliesxrthatxrchoicesxrinvolvexrtrade-
offs.

AACSB:xrReflectivexrThinkingxrAccess
ibility:xrKeyboardxrNavigationxrBlooms:
xrUnderstand

Difficulty:xr02xrMediumxrGrad
eable:xrautomaticxrLearningxrO
bjective:xr01-01
Topic:xrEconomicsxrandxrOpportunityxrCost

2. Axrproductionxrpossibilitiesxrfrontierxrisxraxrsimplexrmodelxrof
a) allocatingxrscarcexrinputsxrtoxrthexrproductionxrofxralternativexroutputs.
a) pricexrandxrproduction/consumptionxrinxraxrmarket.
b) thexrcostxrofxrproducingxrgoods.
c) thexrnumberxrofxrinputsxrrequiredxrtoxrproducexrvaryingxrlevelsxrofxroutput.x r Explan
ation:xrThexrproductionxrpossibilitiesxrfrontierxrshowsxrthexrquantityxrofxrtwoxrgoodsxrthatxrca
nxrbexrproduced.xrItxrimpliesxrthatxrscarcityxrrequiresxrthatxrchoicesxrbexrmadexrasxrtoxrhowxrtox
rusexrresources.



AACSB:xrReflectivexrThinkingxrAccess
ibility:xrKeyboardxrNavigationxrBlooms:
xrUnderstand

Difficulty:xr02xrMediumxrGrad
eable:xrautomaticxrLearningxrO
bjective:xr01-01
Topic:xrModelingxrOpportunityxrCostxrUsingxrthexrProductionxrPossibilitiesxrFrontier

,3. Thexrunderlyingxrreasonxrthatxrtherexrarexrunattainablexrpointsxronxraxrproductionxrpossibil
itiesxrfrontierxrisxrthatxrthere
a. isxrgovernment.
b. arexralwaysxrchoicesxrthatxrmustxrbexrmade.
c. arexrscarcexrresourcesxrwithinxraxrfixedxrlevelxrofxrtechnology.
d. isxrunemploymentxrofxrresources.
Explanation:xrThexrpointsxroutsidexrthexrproductionxrpossibilitiesxrfrontierxrarexrunattainable.xr
Thisxrmeansxrthatxrcurrentlyxravailablexrresourcesxrandxrtechnologyxrarexrinsufficientxrtoxrprod
ucexramountsxrgreaterxrthanxrthosexrillustratedxronxrthexrfrontier.xrOnxraxrgraph,xreverythingxrbe
yondxrthexrfrontierxrisxrunattainable.

AACSB:xrReflectivexrThinkingxrAccess
ibility:xrKeyboardxrNavigationxrBlooms:
xrRemember

Difficulty:xr01xrEasyxrGradeab
le:xrautomaticxrLearningxrObje
ctive:xr01-01
Topic:xrModelingxrOpportunityxrCostxrUsingxrthexrProductionxrPossibilitiesxrFrontier

4. Thexrunderlyingxrreasonxrproductionxrpossibilitiesxrfrontiersxrarexrlikelyxrtoxrbexrbowed
xroutxr(ratherxrthanxrlinear)xrisxrbecause

a. choicesxrhavexrconsequences.
b. therexrarexralwaysxropportunityxrcosts.
c. somexrresourcesxrandxrpeoplexrcanxrbexrbetterxrusedxrproducingxronexrgoodxrr
atherxrthanxranother.
d. therexrisxralwaysxrsomexrlevelxrofxrunemployment.
Explanation:xrIfxrthexrproductionxrpossibilitiesxrfrontierxrisxrnotxraxrlinexrbutxrisxrbowedxroutxraw
ayxrfromxrthexrorigin,xrthenxropportunityxrcostxrisxrincreasing.xrThexrreasonxrforxrthisxrisxrthatxras
xrwexraddxrmorexrresources xrtoxrthexrproductionxrof,xrforxrexample,xrpizza,xrwexrarexrusingxrfewe

rxrresourcesxrtoxrproducexrsoda.xrCompoundingxrthatxrproblem,xratxreachxrstagexrasxrwexrtakexrth
exrresourcesxrawayxrfromxrsodaxrandxrputxrthemxrintoxrpizza,xrwexrarexrmovingxrworkersxrwhoxra
rexrworsexratxrpizzaxrproductionxrandxrbetterxratxrsodaxrproductionxrthanxrthosexrmovedxrinxrthexr
previousxrstage.xrThisxrmeansxrthatxrthexrincreasexrinxrpizzaxrproductionxrisxrdiminishingxrandxrt
hexrlossxrinxrsodaxrproductionxrisxrincreasing.xrAnxreconomistxrwouldxrcallxrthisxranxrexamplexro
fxrincreasingxropportunityxrcost.xrIfxrthexrproductionxrpossibilitiesxrfrontierxrisxraxrstraightxrlinex
rthatxrisxrnotxrbowedxroutxrawayxrfromxrthexrorigin,xrthenxropportunityxrcostxrisxrconstant.



AACSB:xrKnowledgexrApplicationxrAc
cessibility:xrKeyboardxrNavigationxrBlo
oms:xrRemember
Difficulty:xr01xrEasyxrGradeab
le:xrautomaticxrLearningxrObje
ctive:xr01-02
Topic:xrAttributesxrofxrthexrProductionxrPossibilitiesxrFrontier

, 5. Supposexryouxrwerexrmodelingxrthexrimpactxrofxrthexrintroductionxrofxrcomputerxrautoma
tionxrintoxrmanufacturingxronxraxrproductionxrpossibilitiesxrfrontierxr(PPF)xrwithxrtwoxrmanu
facturedxrgoodsxronxrtheirxrrespectivexraxes.xrItxrwouldxrbexrmorexrlikelyxrthatxrthexrresultxrwo
uldxrbexr .
a) generalizedxrgrowthxrwithxrthexrPPFxrmovingxrbothxrupxrandxrtoxrthexrright.
b) specializedxrgrowthxrwithxrthexrPPFxrmovingxrbothxrupxrandxrtoxrthexrright.
c) generalizedxrgrowthxrwithxrthexrPPFxrjustxrmovingxrupxrandxrnotxrtoxrthexrright.
d) specializedxrgrowthxrwithxrthexrPPFxrjustxrmovingxrupxrandxrnotxrtoxrthexrright.xrExpl
anation:xrComputerxrautomationxrisxraxrgeneralxrimprovementxrinxrtechnologyxrsoxritxrwouldxr
improvexrallxrmanufacturing.xrAsxraxrresult,xritxrwouldxrresultxrinxrgeneralizedxrgrowthxrandxr
movexrthexrPPFxrbothxrupxrandxrtoxrthexrright.

AACSB:xrKnowledgexrApplicationxrAc
cessibility:xrKeyboardxrNavigationxrBlo
oms:xrRemember
Difficulty:xr01xrEasyxrGradeab
le:xrautomaticxrLearningxrObje
ctive:xr01-
03xrTopic:xrEconomicxrGrowth

6. Thexroptimizationxrassumptionxrsuggestsxrthatxrpeoplexrmake
a. irrationalxrdecisions.
b. unpredictablexrdecisions.
c. decisionsxrtoxrmakexrthemselvesxrasxrwellxroffxrasxrpossible.
d. decisionsxrwithoutxrthinkingxrveryxrhard.
Explanation:xrThexroptimizationxrassumptionxrsuggestsxrthatxrthexrpersonxrinxrquestionxrisxrtry
ingxrtoxrmaximizexrsomexrobjective.xrConsumersxrarexrassumedxrtoxrbexrmakingxrdecisionsxrth
atxrmaximizexrtheirxrhappinessxrsubjectxrtoxraxrscarcexramountxrofxrmoney.

AACSB:xrReflectivexrThinkingxrAccess
ibility:xrKeyboardxrNavigationxrBlooms:
xrRemember

Difficulty:xr01xrEasyxrGradeab
le:xrautomaticxrLearningxrObje
ctive:xr01-01
Topic:xrThinkingxrEconomically