Solution Manual
Foundations Of Business,
By William M. Pride,
7th Edition
, SOLUTION MANUAL FOR
Foundations Of Business 7e William M. Pride;
Chapter 1-47
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
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 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.
Foundations Of Business,
By William M. Pride,
7th Edition
, SOLUTION MANUAL FOR
Foundations Of Business 7e William M. Pride;
Chapter 1-47
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
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 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.
