Foundations of Business 7th Edition Pride | Complete Test Bank Chapters 1‑47 A+

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 eimplies ethat ethe eallocation edecision echosen eby esociety ecan
a) not emake emore eof eany eone egood.
b) always emake emore eof eany egood.
c) typically emake emore eof eone egood ebut eat ethe eexpense eof emaking
eless eof eanother.
d) always emake emore eof eall egoods esimultaneously.
eExplanation: eScarcity eimplies ethat echoices einvolve etrade-
offs.

AACSB: eReflective eThinking
eAccessibility: eKeyboard eNavigation
eBlooms: eUnderstand
Difficulty: e02 eMedium
eGradeable: eautomatic
eLearning eObjective: e01-01
Topic: eEconomics eand eOpportunity eCost

2. A eproduction epossibilities efrontier eis ea esimple emodel eof
a) allocating escarce einputs eto ethe eproduction eof ealternative eoutputs.
a) price eand eproduction/consumption ein ea emarket.
b) the ecost eof eproducing egoods.

, c) the enumber eof einputs erequired eto eproduce evarying elevels eof eoutput.
e Explanation: eThe eproduction epossibilities efrontier eshows ethe equantity eof etwo
egoods ethat ecan ebe eproduced. eIt eimplies ethat escarcity erequires ethat echoices ebe
emade eas eto ehow eto euse eresources.


AACSB: eReflective eThinking
eAccessibility: eKeyboard eNavigation
eBlooms: eUnderstand
Difficulty: e02 eMedium
eGradeable: eautomatic
eLearning eObjective: e01-01
Topic: eModeling eOpportunity eCost eUsing ethe eProduction ePossibilities eFrontier

,3. The eunderlying ereason ethat ethere eare eunattainable epoints eon ea eproduction
epossibilities efrontier eis ethat ethere
a. is egovernment.
b. are ealways echoices ethat emust ebe emade.
c. are escarce eresources ewithin ea efixed elevel eof etechnology.
d. is eunemployment eof eresources.
Explanation: eThe epoints eoutside ethe eproduction epossibilities efrontier eare eunattainable.
eThis emeans ethat ecurrently eavailable eresources eand etechnology eare einsufficient eto
eproduce eamounts egreater ethan ethose eillustrated eon ethe efrontier. eOn ea egraph,
eeverything ebeyond ethe efrontier eis eunattainable.


AACSB: eReflective eThinking
eAccessibility: eKeyboard eNavigation
eBlooms: eRemember
Difficulty: e01 eEasy
eGradeable: eautomatic
eLearning eObjective: e01-01
Topic: eModeling eOpportunity eCost eUsing ethe eProduction ePossibilities eFrontier

4. The eunderlying ereason eproduction epossibilities efrontiers eare elikely eto ebe
ebowed eout e(rather ethan elinear) eis ebecause
a. choices ehave econsequences.
b. there eare ealways eopportunity ecosts.
c. some eresources eand epeople ecan ebe ebetter eused eproducing eone egood
erather ethan eanother.
d. there eis ealways esome elevel eof eunemployment.
Explanation: eIf ethe eproduction epossibilities efrontier eis enot ea eline ebut eis ebowed eout
eaway efrom ethe eorigin, ethen eopportunity ecost eis eincreasing. eThe ereason efor ethis eis
ethat eas ewe eadd emore eresources eto ethe eproduction eof, efor eexample, epizza, ewe eare
eusing efewer eresources eto eproduce esoda. eCompounding ethat eproblem, eat eeach estage
eas ewe etake ethe eresources eaway efrom esoda eand eput ethem einto epizza, ewe eare emoving
eworkers ewho eare eworse eat epizza eproduction eand ebetter eat esoda eproduction ethan
ethose emoved ein ethe eprevious estage. eThis emeans ethat ethe eincrease ein epizza
eproduction eis ediminishing eand ethe eloss ein esoda eproduction eis eincreasing. eAn
eeconomist ewould ecall ethis ean eexample eof eincreasing eopportunity ecost. eIf ethe
eproduction epossibilities efrontier eis ea estraight eline ethat eis enot ebowed eout eaway efrom
ethe eorigin, ethen eopportunity ecost eis econstant.


AACSB: eKnowledge eApplication
eAccessibility: eKeyboard eNavigation
eBlooms: eRemember
Difficulty: e01 eEasy
eGradeable: eautomatic
eLearning eObjective: e01-02
Topic: eAttributes eof ethe eProduction ePossibilities eFrontier

, 5. Suppose eyou ewere emodeling ethe eimpact eof ethe eintroduction eof ecomputer
eautomation einto emanufacturing eon ea eproduction epossibilities efrontier e(PPF) ewith
etwo emanufactured egoods eon etheir erespective eaxes. eIt ewould ebe emore elikely ethat
ethe eresult ewould ebe e .
a) generalized egrowth ewith ethe ePPF emoving eboth eup eand eto ethe eright.
b) specialized egrowth ewith ethe ePPF emoving eboth eup eand eto ethe eright.
c) generalized egrowth ewith ethe ePPF ejust emoving eup eand enot eto ethe eright.
d) specialized egrowth ewith ethe ePPF ejust emoving eup eand enot eto ethe eright.
eExplanation: eComputer eautomation eis ea egeneral eimprovement ein etechnology eso eit
ewould eimprove eall emanufacturing. eAs ea eresult, eit ewould eresult ein egeneralized
egrowth eand emove ethe ePPF eboth eup eand eto ethe eright.


AACSB: eKnowledge eApplication
eAccessibility: eKeyboard eNavigation
eBlooms: eRemember
Difficulty: e01 eEasy
eGradeable: eautomatic
eLearning eObjective: e01-03
eTopic: eEconomic eGrowth


6. The eoptimization eassumption esuggests ethat epeople emake
a. irrational edecisions.
b. unpredictable edecisions.
c. decisions eto emake ethemselves eas ewell eoff eas epossible.
d. decisions ewithout ethinking every ehard.
Explanation: eThe eoptimization eassumption esuggests ethat ethe eperson ein equestion eis
etrying eto emaximize esome eobjective. eConsumers eare eassumed eto ebe emaking
edecisions ethat emaximize etheir ehappiness esubject eto ea escarce eamount eof emoney.


AACSB: eReflective eThinking
eAccessibility: eKeyboard eNavigation
eBlooms: eRemember
Difficulty: e01 eEasy
eGradeable: eautomatic
eLearning eObjective: e01-01
Topic: eThinking eEconomically