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 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 means we face
trade-offs — producing more of one
item often requires sacrificing the
production of another.
Topic: Economics and Opportunity
Cost
Learning Objective: 01-01
2. A production possibilities frontier
is a simple model of:
✔✔ a) allocating scarce inputs to the
production of alternative outputs.
b) price and production/consumption
in a market.
c) the cost of producing goods.
d) the number of inputs required to
produce varying levels of output.
Explanation: The PPF illustrates
possible production combinations,
showing how limited resources can be
allocated among different goods.
Topic: Modeling Opportunity Cost
Using the Production Possibilities
Frontier
,Learning Objective: 01-01
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: Points beyond the PPF
aren't feasible because the economy
doesn't have the resources or
technology to achieve them.
Topic: Modeling Opportunity Cost
Using the Production Possibilities
Frontier
Learning Objective: 01-01
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: The curve bows
outward because not all resources are
equally suited to producing all goods
— shifting resources leads to
increasing opportunity costs.
Topic: Attributes of the Production
Possibilities Frontier
Learning Objective: 01-02
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: Automation boosts
productivity across manufacturing,
causing the PPF to expand outward in
all directions, reflecting overall
growth.
Topic: Attributes of the Production
Possibilities Frontier
Learning Objective: 01-02
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-03
Topic: Economic Growth
1. 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 amount of money.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Foundations of Business 7th Edition
by William M. Pride, All 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 means we face
trade-offs — producing more of one
item often requires sacrificing the
production of another.
Topic: Economics and Opportunity
Cost
Learning Objective: 01-01
2. A production possibilities frontier
is a simple model of:
✔✔ a) allocating scarce inputs to the
production of alternative outputs.
b) price and production/consumption
in a market.
c) the cost of producing goods.
d) the number of inputs required to
produce varying levels of output.
Explanation: The PPF illustrates
possible production combinations,
showing how limited resources can be
allocated among different goods.
Topic: Modeling Opportunity Cost
Using the Production Possibilities
Frontier
,Learning Objective: 01-01
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: Points beyond the PPF
aren't feasible because the economy
doesn't have the resources or
technology to achieve them.
Topic: Modeling Opportunity Cost
Using the Production Possibilities
Frontier
Learning Objective: 01-01
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: The curve bows
outward because not all resources are
equally suited to producing all goods
— shifting resources leads to
increasing opportunity costs.
Topic: Attributes of the Production
Possibilities Frontier
Learning Objective: 01-02
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: Automation boosts
productivity across manufacturing,
causing the PPF to expand outward in
all directions, reflecting overall
growth.
Topic: Attributes of the Production
Possibilities Frontier
Learning Objective: 01-02
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
Learning Objective: 01-03
Topic: Economic Growth
1. 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 amount of money.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 01 Easy
Gradeable: automatic
