Solution Manual for Foundations of Business 7th Edition by William M. Pride

SolutionmManualmformFoundationsmofmBusinessm7thmEditionmbymWilliammM.mPr
ide




SOLUTION MANUAL FOR
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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) typicallymmakemmoremofmonemgoodmbutmatmthemexpensemofmmakingmles
smofmanother.
d) alwaysmmakemmoremofmallmgoodsmsimultaneously.mExp
lanation:mScarcitymimpliesmthatmchoicesminvolvemtrade-offs.


AACSB:mReflectivemThinkingmAcc
essibility:mKeyboardmNavigationmBlo
oms:mUnderstand
Difficulty:m02mMediummG
radeable:mautomaticmLearn
ingmObjective:m01-01
Topic:mEconomicsmandmOpportunitymCost


2. Amproductionmpossibilitiesmfrontiermismamsimplemmodelmof
a) allocatingmscarceminputsmtomthemproductionmofmalternativemoutputs.
a) pricemandmproduction/consumptionminmammarket.
b) themcostmofmproducingmgoods.
c) themnumbermofminputsm requiredm tom producemvaryingmlevelsm ofmoutput.

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ide




Explanation:mThemproductionmpossibilitiesmfrontiermshowsmthemquantitymofmtwomgoodsmth
atmcanmbemproduced.mItmimpliesmthatmscarcitymrequiresmthatmchoicesmbemmademasmtomhowmt
omusemresources.


AACSB:mReflectivemThinkingmAcc
essibility:mKeyboardmNavigationmBlo
oms:mUnderstand
Difficulty:m02mMediummG
radeable:mautomaticmLearn
ingmObjective:m01-01
Topic:mModelingmOpportunitymCostmUsingmthemProductionmPossibilitiesmFrontier

3. Themunderlyingmreasonmthatmtheremaremunattainablempointsmonmamproductionmpossibiliti
esmfrontiermismthatmthere
a. ismgovernment.
b. aremalwaysmchoicesmthatmmustmbemmade.
c. aremscarcemresourcesmwithinmamfixedmlevelmofmtechnology.
d. ismunemploymentmofmresources.
Explanation:mThempointsmoutsidemthemproductionmpossibilitiesmfrontiermaremunattainable.mTh
ismmeansmthatmcurrentlymavailablemresourcesmandmtechnologymareminsufficientmtomproducema
mountsmgreatermthanmthosemillustratedmonmthemfrontier.mOnmamgraph,meverythingmbeyondmthe
m frontiermismunattainable.


AACSB:mReflectivemThinkingmAcc
essibility:mKeyboardmNavigationmBlo
oms:mRemember
Difficulty:m01mEasymGrad
eable:mautomaticmLearning
Objective:m01-01
m



Topic:mModelingmOpportunitymCostmUsingmthemProductionmPossibilitiesmFrontier


4. Themunderlyingmreasonmproductionmpossibilitiesmfrontiersmaremlikelymtombembowedmout

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ide




(rathermthanmlinear)mismbecause
a. choicesmhavemconsequences.
b. theremaremalwaysmopportunitymcosts.
c. somemresourcesmandmpeoplemcanmbembettermusedmproducingmonemgoodmrat
hermthanmanother.
d. theremismalwaysmsomemlevelmofmunemployment.
Explanation:mIfmthemproductionmpossibilitiesmfrontiermismnotmamlinembutmismbowedmoutmaway
m frommthemorigin,mthenmopportunitymcostmismincreasing.mThemreasonmformthismismthatmasmwema
ddmmoremresourcesmtomthemproductionmof,mformexample,mpizza,mwemaremusingmfewermresourc
esmtomproducemsoda.mCompoundingmthatmproblem,matmeachmstagemasmwemtakemthemresources
m awaymfrommsodamandmputmthemmintompizza,mwemaremmovingmworkersmwhomaremworsematmpi
zzamproductionmandmbettermatmsodamproductionmthanmthosemmovedminmthempreviousmstage.mT
hismmeansmthatmthemincreaseminmpizzamproductionmismdiminishingmandmthemlossminmsodamprod
uctionmismincreasing.mAnmeconomistmwouldmcallmthismanmexamplemofmincreasingmopportunity
m cost.mIfmthemproductionmpossibilitiesmfrontiermismamstraightmlinemthatmismnotmbowedmoutmawa
ymfrommthemorigin,mthenmopportunitymcostmismconstant.


AACSB:mKnowledgemApplicationm
Accessibility:mKeyboardmNavigatio
nmBlooms:mRemember
Difficulty:m01mEasymGrad
eable:mautomaticmLearning
Objective:m01-02
m



Topic:mAttributesmofmthemProductionmPossibilitiesmFrontier

5. Supposemyoumweremmodelingmthemimpactmofmthemintroductionmofmcomputermautomati
onmintommanufacturingmonmamproductionmpossibilitiesmfrontierm(PPF)mwithmtwommanufactu
redmgoodsmonmtheirmrespectivemaxes.mItmwouldmbemmoremlikelymthatmthemresultmwouldmbe .
a) generalizedmgrowthmwithmthemPPFmmovingmbothmupmandmtomthemright.
b) specializedmgrowthmwithmthemPPFmmovingmbothmupmandmtomthemright.
c) generalizedmgrowthmwithmthemPPFmjustmmovingmupmandmnotmtomthemright.
d) specializedmgrowthmwithmthemPPFmjustmmovingmupmandmnotmtomthemright.
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Explanation:mComputermautomationmismamgeneralmimprovementminmtechnologymsomitmwou
ldmimprovemallmmanufacturing.mAsmamresult,mitmwouldmresultminmgeneralizedmgrowthmandm
movemthemPPFmbothmupmandmtomthemright.


AACSB:mKnowledgemApplicationm
Accessibility:mKeyboardmNavigatio
nmBlooms:mRemember
Difficulty:m01mEasymGrade
able:mautomaticmLearningm
Objective:m01-
03mTopic:mEconomicmGrow
th


6. Themoptimizationmassumptionmsuggestsmthatmpeoplemmake
a. irrationalmdecisions.
b. unpredictablemdecisions.
c. decisionsmtommakemthemselvesmasmwellmoffmasmpossible.
d. decisionsmwithoutmthinkingmverymhard.
Explanation:mThemoptimizationmassumptionmsuggestsmthatmthempersonminmquestionmismtryi
ngmtommaximizemsomemobjective.mConsumersmaremassumedmtombemmakingmdecisionsmthatm
maximizemtheirmhappinessmsubjectmtomamscarcemamountmofmmoney.


AACSB:mReflectivemThinkingmAcc
essibility:mKeyboardmNavigationmBlo
oms:mRemember
Difficulty:m01mEasymGrad
eable:mautomaticmLearning
Objective:m01-01
m



Topic:mThinkingmEconomically

7. Imaginemanmeconomistmorderingmdonutsmone-by-
one.mWhenmdecidingmhowmmanymdonutsmtomordermtheymwouldmpickmthatmnumbermwheremthem

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