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+)

Solution Manual for Foundations of Business 7th Editionby
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William M. Pride.
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,SOLUTION MANUAL FOR v v




Foundations of Business 7e William M. Pride; v v v v v v




Chapter 1-47 v




Chapter 1 v




End of Chapter Questions
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Quiz Yourself v




1. Scarcity implies that the allocation decision chosen by society can
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a) not make more of any one good. v v v v v v




b) always make more of any good. v v v v v




c) typically make more of one good but at the expense of making less of v v v v v v v v v v v v v




another. v




d) always make more of all goods simultaneously. v v v v v v




v Explanation: Scarcity implies that choices involve trade-offs. v v v v v v




AACSB: Reflective Thinking v v




Accessibility: Keyboard Navigation
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Blooms: Understand
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Difficulty: 02 Medium v v




Gradeable: automatic
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Learning Objective: 01-01
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Topic: Economics and Opportunity Cost
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2. A production possibilities frontier is a simple model of
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a) allocating scarce inputs to the production of alternative outputs. v v v v v v v v




a) price and production/consumption in a market. v v v v v




b) the cost of producing goods. v v v v




c) the number of inputs required to produce varying levels of output. Explanation:
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The production possibilities frontier shows the quantity of two goods thatcan be produced.
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It implies that scarcity requires that choices be made as to how to useresources.
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AACSB: Reflective Thinking v v




Accessibility: Keyboard Navigation
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Blooms: Understand
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Difficulty: 02 Medium v v




Gradeable: automatic
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Learning Objective: 01-01
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Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
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,3. The underlying reason that there are unattainable points on a production possibilities
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frontier is that there
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a. is government. v




b. are always choices that must be made. v v v v v v




c. are scarce resources within a fixed level of technology. v v v v v v v v




d. is unemployment of resources. v v v




Explanation: The points outside the production possibilities frontier are unattainable. This
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means that currently available resources and technology are insufficient to produce amounts
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greater than those illustrated on the frontier. On a graph, everything beyond the frontier is
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unattainable.
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AACSB: Reflective Thinking v v




Accessibility: Keyboard Navigation
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Blooms: Remember
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Difficulty: 01 Easy v v




Gradeable: automatic
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Learning Objective: 01-01
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Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
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4. The underlying reason production possibilities frontiers are likely to be bowed out
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(rather than linear) is because
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a. choices have consequences. v v




b. there are always opportunity costs. v v v v




c. some resources and people can be better used producing one good rather v v v v v v v v v v v




than another. v v




d. there is always some level of unemployment. v v v v v v




Explanation: If the production possibilities frontier is not a line but is bowed out away from
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the origin, then opportunity cost is increasing. The reason for this is that as we add more
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resources to the production of, for example, pizza, we are using fewer resources to produce
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soda. Compounding that problem, at each stage as we take the resources away from soda and
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put them into pizza, we are moving workers who are worse at pizza production and better at
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soda production than those moved in the previous stage. This means that the increase in pizza
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production is diminishing and the loss in soda productionis increasing. An economist would
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call this an example of increasing opportunity cost. If the production possibilities frontier is a
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straight line that is not bowed out away from the origin, then opportunity cost is constant.
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AACSB: Knowledge Application v v




Accessibility: Keyboard Navigation
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Blooms: Remember
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Difficulty: 01 Easy v v




Gradeable: automatic
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Learning Objective: 01-02
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Topic: Attributes of the Production Possibilities Frontier
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, 5. Suppose you were modeling the impact of the introduction of computer automationinto
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manufacturing on a production possibilities frontier (PPF) with two manufactured goods
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on their respective axes. It would be more likely that the result would be
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a) generalized growth with the PPF moving both up and to the right. v v v v v v v v v v v




b) specialized growth with the PPF moving both up and to the right. v v v v v v v v v v v




c) generalized growth with the PPF just moving up and not to the right. v v v v v v v v v v v v




d) specialized growth with the PPF just moving up and not to the right. Explanation: v v v v v v v v v v v v v




Computer automation is a general improvement in technology so it wouldimprove all
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manufacturing. As a result, it would result in generalized growth and movethe PPF both up
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and to the right.
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AACSB: Knowledge Application v v




Accessibility: Keyboard Navigation
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Blooms: Remember
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Difficulty: 01 Easy v v




Gradeable: automatic
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Learning Objective: 01-03
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Topic: Economic Growth
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6. The optimization assumption suggests that people make
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a. irrational decisions. v




b. unpredictable decisions. v




c. decisions to make themselves as well off as possible. v v v v v v v v




d. decisions without thinking very hard. v v v v




Explanation: The optimization assumption suggests that the person in question is tryingto
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maximize some objective. Consumers are assumed to be making decisions that maximize
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their happiness subject to a scarce amount of money.
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AACSB: Reflective Thinking v v




Accessibility: Keyboard Navigation
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Blooms: Remember
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Difficulty: 01 Easy v v




Gradeable: automatic
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Learning Objective: 01-01
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Topic: Thinking Economically
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Page 3 v



© MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR
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WRITTEN CONSENT OF MCGRAW HILL LLC.
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