Test Bank for Foundations of Business 7th Edition by William Pride (Author), Robert Hughes (Author), Jack Kapoor (Author) (All Chapters Covered) (Multiple choice Questions and Verified Answers) (Graded A+)

TESTBANK | | |
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Foundations of Business by William M. Pride
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7th Edition
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TESTBANK |

,Foundations of Business 7e William M. Pride;
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Chapter 1
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End of Chapter Questions
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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
|ofanother.

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
|ratherthan |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