Solution Manual for Foundations of Business, 7th Edition (William M. Pride)

Solution Manual
Foundations of Business 7th Edition

by William M. Pride, All chapter 1 - 47

,Chapter 1
End of Chapter Questions
Quiz Yourself

1. ScarcityAimpliesAthatAtheAallocationAdecisionAchosenAbyAsocietyAcan
a) notAmakeAmoreAofAanyAoneAgood.
b) alwaysAmakeAmoreAofAanyAgood.
c) typicallyAmakeAmoreAofAoneAgoodAbutAatAtheAexpenseAofAmakingAlessA
ofAanother.
d) alwaysAmakeAmoreAofAallAgoodsAsimultaneously.AExp
lanation:AScarcityAimpliesAthatAchoicesAinvolveAtrade-offs.

AACSB:AReflectiveAThinkingAAccessi
bility:AKeyboardANavigationABlooms:A
Understand
Difficulty:A02AMediumAGrade
able:AautomaticALearningAObj
ective:A01-01
Topic:AEconomicsAandAOpportunityACost

2. AAproductionApossibilitiesAfrontierAisAaAsimpleAmodelAof
a) allocatingAscarceAinputsAtoAtheAproductionAofAalternativeAoutputs.
a) priceAandAproduction/consumptionAinAaAmarket.
b) theAcostAofAproducingAgoods.
c) theAnumberAofAinputsArequiredAtoAproduceAvaryingAlevelsAofAoutput.A Explanatio
n:ATheAproductionApossibilitiesAfrontierAshowsAtheAquantityAofAtwoAgoodsAthatAcanAbeAp
roduced.AItAimpliesAthatAscarcityArequiresAthatAchoicesAbeAmadeAasAtoAhowAtoAuseAresour
ces.

AACSB:AReflectiveAThinkingAAccessi
bility:AKeyboardANavigationABlooms:A
Understand
Difficulty:A02AMediumAGrade
able:AautomaticALearningAObj
ective:A01-01
Topic:AModelingAOpportunityACostAUsingAtheAProductionAPossibilitiesAFrontier

,3. TheAunderlyingAreasonAthatAthereAareAunattainableApointsAonAaAproductionApossibilitie
sAfrontierAisAthatAthere
a. isAgovernment.
b. areAalwaysAchoicesAthatAmustAbeAmade.
c. areAscarceAresourcesAwithinAaAfixedAlevelAofAtechnology.
d. isAunemploymentAofAresources.
Explanation:ATheApointsAoutsideAtheAproductionApossibilitiesAfrontierAareAunattainable.AThi
sAmeansAthatAcurrentlyAavailableAresourcesAandAtechnologyAareAinsufficientAtoAproduceAam
ountsAgreaterAthanAthoseAillustratedAonAtheAfrontier.AOnAaAgraph,AeverythingAbeyondAtheAfr
ontierAisAunattainable.

AACSB:AReflectiveAThinkingAAccessi
bility:AKeyboardANavigationABlooms:A
Remember
Difficulty:A01AEasyAGradeabl
e:AautomaticALearningAObject
ive:A01-01
Topic:AModelingAOpportunityACostAUsingAtheAProductionAPossibilitiesAFrontier

4. TheAunderlyingAreasonAproductionApossibilitiesAfrontiersAareAlikelyAtoAbeAbowedAo
utA(ratherAthanAlinear)AisAbecause
a. choicesAhaveAconsequences.
b. thereAareAalwaysAopportunityAcosts.
c. someAresourcesAandApeopleAcanAbeAbetterAusedAproducingAoneAgoodArathe
rAthanAanother.
d. thereAisAalwaysAsomeAlevelAofAunemployment.
Explanation:AIfAtheAproductionApossibilitiesAfrontierAisAnotAaAlineAbutAisAbowedAoutAawayAf
romAtheAorigin,AthenAopportunityAcostAisAincreasing.ATheAreasonAforAthisAisAthatAasAweAadd
AmoreAresourcesAtoAtheAproductionAof,AforAexample,Apizza,AweAareAusingAfewerAresourcesAt

oAproduceAsoda.ACompoundingAthatAproblem,AatAeachAstageAasAweAtakeAtheAresourcesAawa
yAfromAsodaAandAputAthemAintoApizza,AweAareAmovingAworkersAwhoAareAworseAatApizzaApr
oductionAandAbetterAatAsodaAproductionAthanAthoseAmovedAinAtheApreviousAstage.AThisAme
ansAthatAtheAincreaseAinApizzaAproductionAisAdiminishingAandAtheAlossAinAsodaAproductionAi
sAincreasing.AAnAeconomistAwouldAcallAthisAanAexampleAofAincreasingAopportunityAcost.AIf
AtheAproductionApossibilitiesAfrontierAisAaAstraightAlineAthatAisAnotAbowedAoutAawayAfromAt

heAorigin,AthenAopportunityAcostAisAconstant.

AACSB:AKnowledgeAApplicationAAcc
essibility:AKeyboardANavigationABloo
ms:ARemember
Difficulty:A01AEasyAGradeabl
e:AautomaticALearningAObject
ive:A01-02
Topic:AAttributesAofAtheAProductionAPossibilitiesAFrontier

, 5. SupposeAyouAwereAmodelingAtheAimpactAofAtheAintroductionAofAcomputerAautomatio
nAintoAmanufacturingAonAaAproductionApossibilitiesAfrontierA(PPF)AwithAtwoAmanufactur
edAgoodsAonAtheirArespectiveAaxes.AItAwouldAbeAmoreAlikelyAthatAtheAresultAwouldAbeA .
a) generalizedAgrowthAwithAtheAPPFAmovingAbothAupAandAtoAtheAright.
b) specializedAgrowthAwithAtheAPPFAmovingAbothAupAandAtoAtheAright.
c) generalizedAgrowthAwithAtheAPPFAjustAmovingAupAandAnotAtoAtheAright.
d) specializedAgrowthAwithAtheAPPFAjustAmovingAupAandAnotAtoAtheAright.AExplanat
ion:AComputerAautomationAisAaAgeneralAimprovementAinAtechnologyAsoAitAwouldAimprov
eAallAmanufacturing.AAsAaAresult,AitAwouldAresultAinAgeneralizedAgrowthAandAmoveAtheAP
PFAbothAupAandAtoAtheAright.

AACSB:AKnowledgeAApplicationAAcc
essibility:AKeyboardANavigationABloo
ms:ARemember
Difficulty:A01AEasyAGradeabl
e:AautomaticALearningAObject
ive:A01-
03ATopic:AEconomicAGrowth

6. TheAoptimizationAassumptionAsuggestsAthatApeopleAmake
a. irrationalAdecisions.
b. unpredictableAdecisions.
c. decisionsAtoAmakeAthemselvesAasAwellAoffAasApossible.
d. decisionsAwithoutAthinkingAveryAhard.
Explanation:ATheAoptimizationAassumptionAsuggestsAthatAtheApersonAinAquestionAisAtrying
AtoAmaximizeAsomeAobjective.AConsumersAareAassumedAtoAbeAmakingAdecisionsAthatAma

ximizeAtheirAhappinessAsubjectAtoAaAscarceAamountAofAmoney.

AACSB:AReflectiveAThinkingAAccessi
bility:AKeyboardANavigationABlooms:A
Remember
Difficulty:A01AEasyAGradeabl
e:AautomaticALearningAObject
ive:A01-01
Topic:AThinkingAEconomically