Solution manual for Foundations of Business 7th Edition by William M. Pride – Complete Answer Guide & Chapter Explanations

SOLUTION MANUAL FOR
M M




Foundations of Business 7e William M. Pride;
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ChapterM1-47

Chapter 1 M




End of Chapter Questions
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QuizMYourself

1. ScarcityMimpliesMthatMtheMallocationMdecisionMchosenMbyMsocietyMcan
a) notMmakeMmoreMofManyMoneMgood.
b) alwaysMmakeMmoreMofManyMgood.
c) typicallyMmakeMmoreMofMoneMgoodMbutMatMtheMexpenseMofMmakingMle
ssMofManother.
d) alwaysMmakeMmoreMofMallMgoodsMsimultaneously.MEx
planation:MScarcityMimpliesMthatMchoicesMinvolveMtrade-offs.

AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MUnderstand
Difficulty:M02MMediumMG
radeable:MautomaticMLear
ningMObjective:M01-01
Topic:MEconomicsMandMOpportunityMCost

2. AMproductionMpossibilitiesMfrontierMisMaMsimpleMmodelMof
a) allocatingMscarceMinputsMtoMtheMproductionMofMalternativeMoutputs.
a) priceMandMproduction/consumptionMinMaMmarket.
b) theMcostMofMproducingMgoods.
c) theMnumberMofMinputsMrequiredMtoMproduceMvaryingMlevelsMofMoutput.MExplana
tion:MTheMproductionMpossibilitiesMfrontierMshowsMtheMquantityMofMtwoMgoodsMthatMcanM
beMproduced.MItMimpliesMthatMscarcityMrequiresMthatMchoicesMbeMmadeMasMtoMhowMtoMus
eMresources.

AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MUnderstand
Difficulty:M02MMediumMG
radeable:MautomaticMLear
ningMObjective:M01-01
Topic:MModelingMOpportunityMCostMUsingMtheMProductionMPossibilitiesMFrontier


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,3. TheMunderlyingMreasonMthatMthereMareMunattainableMpointsMonMaMproductionMpossibili
tiesMfrontierMisMthatMthere
a. isMgovernment.
b. areMalwaysMchoicesMthatMmustMbeMmade.
c. areMscarceMresourcesMwithinMaMfixedMlevelMofMtechnology.
d. isMunemploymentMofMresources.
Explanation:MTheMpointsMoutsideMtheMproductionMpossibilitiesMfrontierMareMunattainable.MT
hisMmeansMthatMcurrentlyMavailableMresourcesMandMtechnologyMareMinsufficientMtoMproduce
MamountsMgreaterMthanMthoseMillustratedMonMtheMfrontier.MOnMaMgraph,MeverythingMbeyond

MtheMfrontierMisMunattainable.




AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MRemember
Difficulty:M01MEasyMGrad
eable:MautomaticMLearnin
gMObjective:M01-01
Topic:MModelingMOpportunityMCostMUsingMtheMProductionMPossibilitiesMFrontier

4. TheMunderlyingMreasonMproductionMpossibilitiesMfrontiersMareMlikelyMtoMbeMbowedM
outM(ratherMthanMlinear)MisMbecause
a. choicesMhaveMconsequences.
b. thereMareMalwaysMopportunityMcosts.
c. someMresourcesMandMpeopleMcanMbeMbetterMusedMproducingMoneMgoodMra
therMthanManother.
d. thereMisMalwaysMsomeMlevelMofMunemployment.
Explanation:MIfMtheMproductionMpossibilitiesMfrontierMisMnotMaMlineMbutMisMbowedMoutMawa
yMfromMtheMorigin,MthenMopportunityMcostMisMincreasing.MTheMreasonMforMthisMisMthatMasMw
eMaddMmoreMresourcesMtoMtheMproductionMof,MforMexample,Mpizza,MweMareMusingMfewerMres
ourcesMtoMproduceMsoda.MCompoundingMthatMproblem,MatMeachMstageMasMweMtakeMtheMreso
urcesMawayMfromMsodaMandMputMthemMintoMpizza,MweMareMmovingMworkersMwhoMareMwors
eMatMpizzaMproductionMandMbetterMatMsodaMproductionMthanMthoseMmovedMinMtheMpreviousM
stage.MThisMmeansMthatMtheMincreaseMinMpizzaMproductionMisMdiminishingMandMtheMlossMinM
sodaMproductionMisMincreasing.MAnMeconomistMwouldMcallMthisManMexampleMofMincreasingM
opportunityMcost.MIfMtheMproductionMpossibilitiesMfrontierMisMaMstraightMlineMthatMisMnotMbo
wedMoutMawayMfromMtheMorigin,MthenMopportunityMcostMisMconstant.

AACSB:MKnowledgeMApplicationM
Accessibility:MKeyboardMNavigatio
nMBlooms:MRemember
Difficulty:M01MEasyMGrad
eable:MautomaticMLearnin
gMObjective:M01-02
Topic:MAttributesMofMtheMProductionMPossibilitiesMFrontier




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,5. SupposeMyouMwereMmodelingMtheMimpactMofMtheMintroductionMofMcomputerMautomat
ionMintoMmanufacturingMonMaMproductionMpossibilitiesMfrontierM(PPF)MwithMtwoMmanufac
turedMgoodsMonMtheirMrespectiveMaxes.MItMwouldMbeMmoreMlikelyMthatMtheMresultMwouldM
be .
a) generalizedMgrowthMwithMtheMPPFMmovingMbothMupMandMtoMtheMright.
b) specializedMgrowthMwithMtheMPPFMmovingMbothMupMandMtoMtheMright.
c) generalizedMgrowthMwithMtheMPPFMjustMmovingMupMandMnotMtoMtheMright.
d) specializedMgrowthMwithMtheMPPFMjustMmovingMupMandMnotMtoMtheMright.MExpla
nation:MComputerMautomationMisMaMgeneralMimprovementMinMtechnologyMsoMitMwouldMi
mproveMallMmanufacturing.MAsMaMresult,MitMwouldMresultMinMgeneralizedMgrowthMandMm
oveMtheMPPFMbothMupMandMtoMtheMright.

AACSB:MKnowledgeMApplicationM
Accessibility:MKeyboardMNavigatio
nMBlooms:MRemember
Difficulty:M01MEasyMGrad
eable:MautomaticMLearning
MObjective:M01-

03MTopic:MEconomicMGro
wth

6. TheMoptimizationMassumptionMsuggestsMthatMpeopleMmake
a. irrationalMdecisions.
b. unpredictableMdecisions.
c. decisionsMtoMmakeMthemselvesMasMwellMoffMasMpossible.
d. decisionsMwithoutMthinkingMveryMhard.
Explanation:MTheMoptimizationMassumptionMsuggestsMthatMtheMpersonMinMquestionMisMtry
ingMtoMmaximizeMsomeMobjective.MConsumersMareMassumedMtoMbeMmakingMdecisionsMtha
tMmaximizeMtheirMhappinessMsubjectMtoMaMscarceMamountMofMmoney.

AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MRemember
Difficulty:M01MEasyMGrad
eable:MautomaticMLearnin
gMObjective:M01-01
Topic:MThinkingMEconomically




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, 7. ImagineManMeconomistMorderingMdonutsMone-by-
one.MWhenMdecidingMhowMmanyMdonutsMtoMorderMtheyMwouldMpickMthatMnumberMwhereMth
eMenjoymentMofMthe
equalsMtheMenjoymentMtheyMcouldMgetMfromMusingMtheMmoneyMonManotherMgood.
a. firstMdonut
b. last/marginalMdonut
c. average/typicalMdonut
d. totalMnumberMofMdonuts
Explanation:MTheMenjoymentMofMtheMlastMsliceMisMtheMmarginalMbenefitMofMthatMslice.MIf
MthisM
enjoymentMisMmoreMthanMtheMenjoymentMfromMsomeMalternative,MmoreMwillMbeMco
nsumed.

AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MUnderstand
Difficulty:M02MMediumMGrade
able:M automaticMLearningMOb
jective:M01-
04MTopic:MThinkingMEconomi
cally

8. OfMcourse,MallMindividualMstudentsMareMbetterMoffMifMtheyMearnMbetterMgrades.MIfMyouM
wereMtoMconcludeMthatMallMstudentsMwouldMbeMbetterMoffMifMeveryoneMreceivedManMA,MyouM
would
a. haveMfallenMvictimMtoMtheMfallacyMofMscarcity.
b. beMright.
c. haveMfallenMvictimMtoMtheMfallacyMofMcomposition.
d. beMmistakingMcorrelationMwithMcausation.
Explanation:MTheMfallacyMofMcompositionMisMtheMmistakeMinMlogicMthatMsuggestsMthatMtheM
totalMeconomicMimpactMofMsomethingMisMalwaysMandMsimplyMequalMtoMtheMsumMofMtheMindi
vidualMparts.

AACSB:MReflectiveMThinkingMAcc
essibility:MKeyboardMNavigationMBl
ooms:MUnderstand
Difficulty:M02MMediumMGrade
able:M automaticMLearningMOb
jective:M01-
04MTopic:MThinkingMEconomi
cally




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