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 |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.
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:
|Computer |automation |is |a |general |improvement |in |technology |so |it |would |improve |all
|manufacturing. |As |a |result, |it |would |result |in |generalized |growth |and |move |the |PPF |both
|up |and |to |the |right.
AACSB: |Knowledge |Application
|Accessibility: |Keyboard |Navigation
|Blooms: |Remember
Difficulty: |01 |Easy
|Gradeable: |automatic
|Learning |Objective: |01-03
|Topic: |Economic |Growth
6. 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
|Learning |Objective: |01-01
Topic: |Thinking |Economically
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 |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.
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:
|Computer |automation |is |a |general |improvement |in |technology |so |it |would |improve |all
|manufacturing. |As |a |result, |it |would |result |in |generalized |growth |and |move |the |PPF |both
|up |and |to |the |right.
AACSB: |Knowledge |Application
|Accessibility: |Keyboard |Navigation
|Blooms: |Remember
Difficulty: |01 |Easy
|Gradeable: |automatic
|Learning |Objective: |01-03
|Topic: |Economic |Growth
6. 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
|Learning |Objective: |01-01
Topic: |Thinking |Economically
