Solution Manual oi
Foundations of Business 7th Edition
oi oi oi oi oi
by William M. Pride, All chapter 1 - 47
oi oi oi oi oi oi oi oi oi
,Chapter 1 oi
EndoiofoiChapteroiQuestions
QuizoiYourself
1. Scarcityoiimpliesoithatoitheoiallocationoidecisionoichosenoibyoisocietyoican
a) notoimakeoimoreoiofoianyoioneoigood.
b) alwaysoimakeoimoreoiofoianyoigood.
c) typicallyoimakeoimoreoiofoioneoigoodoibutoiatoitheoiexpenseoiofoimaking
oilessoiofoianother.
d) alwaysoimakeoimoreoiofoialloigoodsoisimultaneously.oi
Explanation:oiScarcityoiimpliesoithatoichoicesoiinvolveoitrade-
offs.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiUnderstand
Difficulty:oi02oiMediumoiGra
deable:oiautomaticoiLearningoi
Objective:oi01-01
Topic:oiEconomicsoiandoiOpportunityoiCost
2. Aoiproductionoipossibilitiesoifrontieroiisoiaoisimpleoimodeloiof
a) allocatingoiscarceoiinputsoitooitheoiproductionoiofoialternativeoioutputs.
a) priceoiandoiproduction/consumptionoiinoiaoimarket.
b) theoicostoiofoiproducingoigoods.
c) theoinumberoiofoiinputsoirequiredoitooiproduceoivaryingoilevelsoiofoioutput.o i Exp
lanation:oiTheoiproductionoipossibilitiesoifrontieroishowsoitheoiquantityoiofoitwooigoodsoit
hatoicanoibeoiproduced.oiItoiimpliesoithatoiscarcityoirequiresoithatoichoicesoibeoimadeoiasoit
ooihowoitooiuseoiresources.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiUnderstand
Difficulty:oi02oiMediumoiGra
deable:oiautomaticoiLearningoi
Objective:oi01-01
Topic:oiModelingoiOpportunityoiCostoiUsingoitheoiProductionoiPossibilitiesoiFrontier
,3. Theoiunderlyingoireasonoithatoithereoiareoiunattainableoipointsoionoiaoiproductionoipossi
bilitiesoifrontieroiisoithatoithere
a. isoigovernment.
b. areoialwaysoichoicesoithatoimustoibeoimade.
c. areoiscarceoiresourcesoiwithinoiaoifixedoileveloiofoitechnology.
d. isoiunemploymentoiofoiresources.
Explanation:oiTheoipointsoioutsideoitheoiproductionoipossibilitiesoifrontieroiareoiunattainable
.oiThisoimeansoithatoicurrentlyoiavailableoiresourcesoiandoitechnologyoiareoiinsufficientoitooi
produceoiamountsoigreateroithanoithoseoiillustratedoionoitheoifrontier.oiOnoiaoigraph,oieveryt
hingoibeyondoitheoifrontieroiisoiunattainable.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-01
Topic:oiModelingoiOpportunityoiCostoiUsingoitheoiProductionoiPossibilitiesoiFrontier
4. Theoiunderlyingoireasonoiproductionoipossibilitiesoifrontiersoiareoilikelyoitooibeoibow
edoioutoi(ratheroithanoilinear)oiisoibecause
a. choicesoihaveoiconsequences.
b. thereoiareoialwaysoiopportunityoicosts.
c. someoiresourcesoiandoipeopleoicanoibeoibetteroiusedoiproducingoioneoigoodoi
ratheroithanoianother.
d. thereoiisoialwaysoisomeoileveloiofoiunemployment.
Explanation:oiIfoitheoiproductionoipossibilitiesoifrontieroiisoinotoiaoilineoibutoiisoibowedoiout
oiawayoifromoitheoiorigin,oithenoiopportunityoicostoiisoiincreasing.oiTheoireasonoiforoithisoiis
oithatoiasoiweoiaddoimoreoiresourcesoitooitheoiproductionoiof,oiforoiexample,oipizza,oiweoiareo
iusingoifeweroiresourcesoitooiproduceoisoda.oiCompoundingoithatoiproblem,oiatoieachoistageo
iasoiweoitakeoitheoiresourcesoiawayoifromoisodaoiandoiputoithemoiintooipizza,oiweoiareoimovi
ngoiworkersoiwhooiareoiworseoiatoipizzaoiproductionoiandoibetteroiatoisodaoiproductionoithan
oithoseoimovedoiinoitheoipreviousoistage.oiThisoimeansoithatoitheoiincreaseoiinoipizzaoiproduct
ionoiisoidiminishingoiandoitheoilossoiinoisodaoiproductionoiisoiincreasing.oiAnoieconomistoiw
ouldoicalloithisoianoiexampleoiofoiincreasingoiopportunityoicost.oiIfoitheoiproductionoipossibi
litiesoifrontieroiisoiaoistraightoilineoithatoiisoinotoibowedoioutoiawayoifromoitheoiorigin,oithenoi
opportunityoicostoiisoiconstant.
AACSB:oiKnowledgeoiApplicationoiA
ccessibility:oiKeyboardoiNavigationoiBl
ooms:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-02
Topic:oiAttributesoiofoitheoiProductionoiPossibilitiesoiFrontier
, 5. Supposeoiyouoiwereoimodelingoitheoiimpactoiofoitheoiintroductionoiofoicomputeroiauto
mationoiintooimanufacturingoionoiaoiproductionoipossibilitiesoifrontieroi(PPF)oiwithoitwooi
manufacturedoigoodsoionoitheiroirespectiveoiaxes.oiItoiwouldoibeoimoreoilikelyoithatoitheoir
esultoiwouldoibeoi .
a) generalizedoigrowthoiwithoitheoiPPFoimovingoibothoiupoiandoitooitheoiright.
b) specializedoigrowthoiwithoitheoiPPFoimovingoibothoiupoiandoitooitheoiright.
c) generalizedoigrowthoiwithoitheoiPPFoijustoimovingoiupoiandoinotoitooitheoiright.
d) specializedoigrowthoiwithoitheoiPPFoijustoimovingoiupoiandoinotoitooitheoiright.oiE
xplanation:oiComputeroiautomationoiisoiaoigeneraloiimprovementoiinoitechnologyoisooiitoi
wouldoiimproveoialloimanufacturing.oiAsoiaoiresult,oiitoiwouldoiresultoiinoigeneralizedoigro
wthoiandoimoveoitheoiPPFoibothoiupoiandoitooitheoiright.
AACSB:oiKnowledgeoiApplicationoiA
ccessibility:oiKeyboardoiNavigationoiBl
ooms:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-
03oiTopic:oiEconomicoiGrowt
h
6. Theoioptimizationoiassumptionoisuggestsoithatoipeopleoimake
a. irrationaloidecisions.
b. unpredictableoidecisions.
c. decisionsoitooimakeoithemselvesoiasoiwelloioffoiasoipossible.
d. decisionsoiwithoutoithinkingoiveryoihard.
Explanation:oiTheoioptimizationoiassumptionoisuggestsoithatoitheoipersonoiinoiquestionoiisoi
tryingoitooimaximizeoisomeoiobjective.oiConsumersoiareoiassumedoitooibeoimakingoidecisi
onsoithatoimaximizeoitheiroihappinessoisubjectoitooiaoiscarceoiamountoiofoimoney.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-01
Topic:oiThinkingoiEconomically
Foundations of Business 7th Edition
oi oi oi oi oi
by William M. Pride, All chapter 1 - 47
oi oi oi oi oi oi oi oi oi
,Chapter 1 oi
EndoiofoiChapteroiQuestions
QuizoiYourself
1. Scarcityoiimpliesoithatoitheoiallocationoidecisionoichosenoibyoisocietyoican
a) notoimakeoimoreoiofoianyoioneoigood.
b) alwaysoimakeoimoreoiofoianyoigood.
c) typicallyoimakeoimoreoiofoioneoigoodoibutoiatoitheoiexpenseoiofoimaking
oilessoiofoianother.
d) alwaysoimakeoimoreoiofoialloigoodsoisimultaneously.oi
Explanation:oiScarcityoiimpliesoithatoichoicesoiinvolveoitrade-
offs.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiUnderstand
Difficulty:oi02oiMediumoiGra
deable:oiautomaticoiLearningoi
Objective:oi01-01
Topic:oiEconomicsoiandoiOpportunityoiCost
2. Aoiproductionoipossibilitiesoifrontieroiisoiaoisimpleoimodeloiof
a) allocatingoiscarceoiinputsoitooitheoiproductionoiofoialternativeoioutputs.
a) priceoiandoiproduction/consumptionoiinoiaoimarket.
b) theoicostoiofoiproducingoigoods.
c) theoinumberoiofoiinputsoirequiredoitooiproduceoivaryingoilevelsoiofoioutput.o i Exp
lanation:oiTheoiproductionoipossibilitiesoifrontieroishowsoitheoiquantityoiofoitwooigoodsoit
hatoicanoibeoiproduced.oiItoiimpliesoithatoiscarcityoirequiresoithatoichoicesoibeoimadeoiasoit
ooihowoitooiuseoiresources.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiUnderstand
Difficulty:oi02oiMediumoiGra
deable:oiautomaticoiLearningoi
Objective:oi01-01
Topic:oiModelingoiOpportunityoiCostoiUsingoitheoiProductionoiPossibilitiesoiFrontier
,3. Theoiunderlyingoireasonoithatoithereoiareoiunattainableoipointsoionoiaoiproductionoipossi
bilitiesoifrontieroiisoithatoithere
a. isoigovernment.
b. areoialwaysoichoicesoithatoimustoibeoimade.
c. areoiscarceoiresourcesoiwithinoiaoifixedoileveloiofoitechnology.
d. isoiunemploymentoiofoiresources.
Explanation:oiTheoipointsoioutsideoitheoiproductionoipossibilitiesoifrontieroiareoiunattainable
.oiThisoimeansoithatoicurrentlyoiavailableoiresourcesoiandoitechnologyoiareoiinsufficientoitooi
produceoiamountsoigreateroithanoithoseoiillustratedoionoitheoifrontier.oiOnoiaoigraph,oieveryt
hingoibeyondoitheoifrontieroiisoiunattainable.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-01
Topic:oiModelingoiOpportunityoiCostoiUsingoitheoiProductionoiPossibilitiesoiFrontier
4. Theoiunderlyingoireasonoiproductionoipossibilitiesoifrontiersoiareoilikelyoitooibeoibow
edoioutoi(ratheroithanoilinear)oiisoibecause
a. choicesoihaveoiconsequences.
b. thereoiareoialwaysoiopportunityoicosts.
c. someoiresourcesoiandoipeopleoicanoibeoibetteroiusedoiproducingoioneoigoodoi
ratheroithanoianother.
d. thereoiisoialwaysoisomeoileveloiofoiunemployment.
Explanation:oiIfoitheoiproductionoipossibilitiesoifrontieroiisoinotoiaoilineoibutoiisoibowedoiout
oiawayoifromoitheoiorigin,oithenoiopportunityoicostoiisoiincreasing.oiTheoireasonoiforoithisoiis
oithatoiasoiweoiaddoimoreoiresourcesoitooitheoiproductionoiof,oiforoiexample,oipizza,oiweoiareo
iusingoifeweroiresourcesoitooiproduceoisoda.oiCompoundingoithatoiproblem,oiatoieachoistageo
iasoiweoitakeoitheoiresourcesoiawayoifromoisodaoiandoiputoithemoiintooipizza,oiweoiareoimovi
ngoiworkersoiwhooiareoiworseoiatoipizzaoiproductionoiandoibetteroiatoisodaoiproductionoithan
oithoseoimovedoiinoitheoipreviousoistage.oiThisoimeansoithatoitheoiincreaseoiinoipizzaoiproduct
ionoiisoidiminishingoiandoitheoilossoiinoisodaoiproductionoiisoiincreasing.oiAnoieconomistoiw
ouldoicalloithisoianoiexampleoiofoiincreasingoiopportunityoicost.oiIfoitheoiproductionoipossibi
litiesoifrontieroiisoiaoistraightoilineoithatoiisoinotoibowedoioutoiawayoifromoitheoiorigin,oithenoi
opportunityoicostoiisoiconstant.
AACSB:oiKnowledgeoiApplicationoiA
ccessibility:oiKeyboardoiNavigationoiBl
ooms:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-02
Topic:oiAttributesoiofoitheoiProductionoiPossibilitiesoiFrontier
, 5. Supposeoiyouoiwereoimodelingoitheoiimpactoiofoitheoiintroductionoiofoicomputeroiauto
mationoiintooimanufacturingoionoiaoiproductionoipossibilitiesoifrontieroi(PPF)oiwithoitwooi
manufacturedoigoodsoionoitheiroirespectiveoiaxes.oiItoiwouldoibeoimoreoilikelyoithatoitheoir
esultoiwouldoibeoi .
a) generalizedoigrowthoiwithoitheoiPPFoimovingoibothoiupoiandoitooitheoiright.
b) specializedoigrowthoiwithoitheoiPPFoimovingoibothoiupoiandoitooitheoiright.
c) generalizedoigrowthoiwithoitheoiPPFoijustoimovingoiupoiandoinotoitooitheoiright.
d) specializedoigrowthoiwithoitheoiPPFoijustoimovingoiupoiandoinotoitooitheoiright.oiE
xplanation:oiComputeroiautomationoiisoiaoigeneraloiimprovementoiinoitechnologyoisooiitoi
wouldoiimproveoialloimanufacturing.oiAsoiaoiresult,oiitoiwouldoiresultoiinoigeneralizedoigro
wthoiandoimoveoitheoiPPFoibothoiupoiandoitooitheoiright.
AACSB:oiKnowledgeoiApplicationoiA
ccessibility:oiKeyboardoiNavigationoiBl
ooms:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-
03oiTopic:oiEconomicoiGrowt
h
6. Theoioptimizationoiassumptionoisuggestsoithatoipeopleoimake
a. irrationaloidecisions.
b. unpredictableoidecisions.
c. decisionsoitooimakeoithemselvesoiasoiwelloioffoiasoipossible.
d. decisionsoiwithoutoithinkingoiveryoihard.
Explanation:oiTheoioptimizationoiassumptionoisuggestsoithatoitheoipersonoiinoiquestionoiisoi
tryingoitooimaximizeoisomeoiobjective.oiConsumersoiareoiassumedoitooibeoimakingoidecisi
onsoithatoimaximizeoitheiroihappinessoisubjectoitooiaoiscarceoiamountoiofoimoney.
AACSB:oiReflectiveoiThinkingoiAcces
sibility:oiKeyboardoiNavigationoiBloom
s:oiRemember
Difficulty:oi01oiEasyoiGradea
ble:oiautomaticoiLearningoiOb
jective:oi01-01
Topic:oiThinkingoiEconomically
