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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
187|87P87a87
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, Chapter 1 87
End8 7 of8 7 Chapter8 7 Questions
Quiz8 7 Yourself
1. Scarcity8 7 implies8 7 that8 7 the8 7 allocation8 7 decision8 7 chosen8 7 by8 7 society8 7 can
a) not8 7 make8 7 more8 7 of8 7 any8 7 one8 7 good.
b) always8 7 make8 7 more8 7 of8 7 any8 7 good.
c) typically8 7 make8 7 more8 7 of8 7 one8 7 good8 7 but8 7 at8 7 the8 7 expens
e8 7 of8 7 making87less8 7 of8 7 another.
d) always8 7 make8 7 more8 7 of8 7 all8 7 goods8 7 simulta
neously.87Explanation:8 7 Scarcity87implies8 7 that8 7 choices
8 7 involve8 7 trade-87offs.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Understand
Difficulty:870287Medium87Gr
adeable:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Economics8 7 and8 7 Opportunity8 7 Cost
2. A8 7 production8 7 possibilities8 7 frontier8 7 is8 7 a8 7 simple8 7 model8 7 of
a) allocating8 7 scarce8 7 inputs8 7 to8 7 the8 7 production8 7 of8 7 alternative8 7 outputs.
a) price8 7 and8 7 production/consumption8 7 in8 7 a8 7 market.
b) the8 7 cost8 7 of8 7 producing8 7 goods.
c) the87number87of87inputs87required87to87produce87varying87levels87of87output.8 7
Explanation:8 7 The8 7 production8 7 possibilities8 7 frontier8 7 shows8 7 the8 7 quantity8 7 o
f8 7 two8 7 goods8 7 t87hat8 7 can8 7 be8 7 produced.8 7 It8 7 implies8 7 that8 7 scarcity8 7 requi
res8 7 that8 7 choices8 7 be87made8 7 as8 7 t87o8 7 how8 7 to8 7 use8 7 resources.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Understand
Difficulty:870287Medium87Gr
adeable:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Modeling8 7 Opportunity8 7 Cost8 7 Using8 7 the8 7 Production8 7 Possibilities8 7 Frontier
287|87P87a87
g87e
,3. The8 7 underlying8 7 reason8 7 that8 7 there8 7 are8 7 unattainable8 7 points8 7 on8 7
a8 7 production87possibilities8 7 frontier8 7 is8 7 that8 7 there
a. is8 7 government.
b. are8 7 always8 7 choices8 7 that8 7 must8 7 be8 7 made.
c. are8 7 scarce8 7 resources8 7 within8 7 a8 7 fixed8 7 level8 7 of8 7 technology.
d. is8 7 unemployment8 7 of8 7 resources.
Explanation:8 7 The8 7 points8 7 outside8 7 the8 7 production8 7 possibilities8 7 frontier8 7 are8 7 unatta
inable
.8 7 This8 7 means8 7 that8 7 currently8 7 available8 7 resources8 7 and8 7 technology8 7 are8 7 in
sufficient8 7 to87produce8 7 amounts8 7 greater8 7 than8 7 those8 7 illustrated8 7 on8 7 the8 7 fro
ntier.8 7 On8 7 a8 7 graph,87everything8 7 beyond8 7 the8 7 frontier8 7 is8 7 unattainable.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Remember
Difficulty:870187Easy87Grade
able:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Modeling8 7 Opportunity8 7 Cost8 7 Using8 7 the8 7 Production8 7 Possibilities8 7 Frontier
4. The8 7 underlying8 7 reason8 7 production8 7 possibilities8 7 frontiers8 7 are8 7 li
kely8 7 to8 7 be87bowed8 7 out8 7 (rather8 7 than8 7 linear)8 7 is8 7 because
a. choices8 7 have8 7 consequences.
b. there8 7 are8 7 always8 7 opportunity8 7 costs.
c. some8 7 resources8 7 and8 7 people8 7 can8 7 be8 7 better8 7 used8 7 producing
8 7 one8 7 good87rather8 7 than8 7 another.
d. there8 7 is8 7 always8 7 some8 7 level8 7 of8 7 unemployment.
Explanation:8 7 If8 7 the8 7 production8 7 possibilities8 7 frontier8 7 is8 7 not8 7 a8 7 line8 7 but8 7 i
s8 7 bowed8 7 out87away8 7 from8 7 the8 7 origin,8 7 then8 7 opportunity8 7 cost8 7 is8 7 incre
asing.8 7 The8 7 reason8 7 for8 7 this8 7 is87that8 7 as8 7 we8 7 add8 7 more8 7 resources8 7
to8 7 the8 7 production8 7 of,8 7 for8 7 example,8 7 pizza,8 7 we8 7 are87using8 7 fewer8 7 res
ources8 7 to8 7 produce8 7 soda.8 7 Compounding8 7 that8 7 problem,8 7 at8 7 each8 7 stage87
as8 7 we8 7 take8 7 the8 7 resources8 7 away8 7 from8 7 soda8 7 and8 7 put8 7 them8 7 into
8 7 pizza,8 7 we8 7 are87moving8 7 workers8 7 who8 7 are8 7 worse8 7 at8 7 pizza8 7 production8
7 and8 7 better8 7 at8 7 soda8 7 production87than8 7 those8 7 moved8 7 in8 7 the8 7 previous8
7 stage.8 7 This8 7 means8 7 that8 7 the8 7 increase8 7 in8 7 pizza87product87ion8 7 is8 7 diminish
ing8 7 and8 7 the8 7 loss8 7 in8 7 soda8 7 production8 7 is8 7 increasing.8 7 An87economist8 7 woul
d8 7 call8 7 this8 7 an8 7 example8 7 of8 7 increasing8 7 opportunity8 7 cost.8 7 If8 7 the87productio
n8 7 possibilities8 7 frontier8 7 is8 7 a8 7 straight8 7 line8 7 that8 7 is8 7 not8 7 bowed8 7 out
8 7 away87from8 7 the8 7 origin,8 7 then87opportunity8 7 cost8 7 is8 7 constant.
AACSB:87Knowledge87Application87
Accessibility:87Keyboard87Navigation
87Blooms:8 7 Remember
Difficulty:870187Easy87Grade
able:
387|87P87a87
g87e
, automatic
87Learning87Objective:8 7 01-
02
Topic:8 7 Attributes8 7 of8 7 the8 7 Production8 7 Possibilities8 7 Frontier
487|87P87a87
g87e
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
187|87P87a87
g87e
, Chapter 1 87
End8 7 of8 7 Chapter8 7 Questions
Quiz8 7 Yourself
1. Scarcity8 7 implies8 7 that8 7 the8 7 allocation8 7 decision8 7 chosen8 7 by8 7 society8 7 can
a) not8 7 make8 7 more8 7 of8 7 any8 7 one8 7 good.
b) always8 7 make8 7 more8 7 of8 7 any8 7 good.
c) typically8 7 make8 7 more8 7 of8 7 one8 7 good8 7 but8 7 at8 7 the8 7 expens
e8 7 of8 7 making87less8 7 of8 7 another.
d) always8 7 make8 7 more8 7 of8 7 all8 7 goods8 7 simulta
neously.87Explanation:8 7 Scarcity87implies8 7 that8 7 choices
8 7 involve8 7 trade-87offs.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Understand
Difficulty:870287Medium87Gr
adeable:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Economics8 7 and8 7 Opportunity8 7 Cost
2. A8 7 production8 7 possibilities8 7 frontier8 7 is8 7 a8 7 simple8 7 model8 7 of
a) allocating8 7 scarce8 7 inputs8 7 to8 7 the8 7 production8 7 of8 7 alternative8 7 outputs.
a) price8 7 and8 7 production/consumption8 7 in8 7 a8 7 market.
b) the8 7 cost8 7 of8 7 producing8 7 goods.
c) the87number87of87inputs87required87to87produce87varying87levels87of87output.8 7
Explanation:8 7 The8 7 production8 7 possibilities8 7 frontier8 7 shows8 7 the8 7 quantity8 7 o
f8 7 two8 7 goods8 7 t87hat8 7 can8 7 be8 7 produced.8 7 It8 7 implies8 7 that8 7 scarcity8 7 requi
res8 7 that8 7 choices8 7 be87made8 7 as8 7 t87o8 7 how8 7 to8 7 use8 7 resources.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Understand
Difficulty:870287Medium87Gr
adeable:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Modeling8 7 Opportunity8 7 Cost8 7 Using8 7 the8 7 Production8 7 Possibilities8 7 Frontier
287|87P87a87
g87e
,3. The8 7 underlying8 7 reason8 7 that8 7 there8 7 are8 7 unattainable8 7 points8 7 on8 7
a8 7 production87possibilities8 7 frontier8 7 is8 7 that8 7 there
a. is8 7 government.
b. are8 7 always8 7 choices8 7 that8 7 must8 7 be8 7 made.
c. are8 7 scarce8 7 resources8 7 within8 7 a8 7 fixed8 7 level8 7 of8 7 technology.
d. is8 7 unemployment8 7 of8 7 resources.
Explanation:8 7 The8 7 points8 7 outside8 7 the8 7 production8 7 possibilities8 7 frontier8 7 are8 7 unatta
inable
.8 7 This8 7 means8 7 that8 7 currently8 7 available8 7 resources8 7 and8 7 technology8 7 are8 7 in
sufficient8 7 to87produce8 7 amounts8 7 greater8 7 than8 7 those8 7 illustrated8 7 on8 7 the8 7 fro
ntier.8 7 On8 7 a8 7 graph,87everything8 7 beyond8 7 the8 7 frontier8 7 is8 7 unattainable.
AACSB:87Reflective87Thinking87Acce
ssibility:87Keyboard87Navigation87Blo
om87s:8 7 Remember
Difficulty:870187Easy87Grade
able:
automatic
87Learning87Objective:8 7 01-
01
Topic:8 7 Modeling8 7 Opportunity8 7 Cost8 7 Using8 7 the8 7 Production8 7 Possibilities8 7 Frontier
4. The8 7 underlying8 7 reason8 7 production8 7 possibilities8 7 frontiers8 7 are8 7 li
kely8 7 to8 7 be87bowed8 7 out8 7 (rather8 7 than8 7 linear)8 7 is8 7 because
a. choices8 7 have8 7 consequences.
b. there8 7 are8 7 always8 7 opportunity8 7 costs.
c. some8 7 resources8 7 and8 7 people8 7 can8 7 be8 7 better8 7 used8 7 producing
8 7 one8 7 good87rather8 7 than8 7 another.
d. there8 7 is8 7 always8 7 some8 7 level8 7 of8 7 unemployment.
Explanation:8 7 If8 7 the8 7 production8 7 possibilities8 7 frontier8 7 is8 7 not8 7 a8 7 line8 7 but8 7 i
s8 7 bowed8 7 out87away8 7 from8 7 the8 7 origin,8 7 then8 7 opportunity8 7 cost8 7 is8 7 incre
asing.8 7 The8 7 reason8 7 for8 7 this8 7 is87that8 7 as8 7 we8 7 add8 7 more8 7 resources8 7
to8 7 the8 7 production8 7 of,8 7 for8 7 example,8 7 pizza,8 7 we8 7 are87using8 7 fewer8 7 res
ources8 7 to8 7 produce8 7 soda.8 7 Compounding8 7 that8 7 problem,8 7 at8 7 each8 7 stage87
as8 7 we8 7 take8 7 the8 7 resources8 7 away8 7 from8 7 soda8 7 and8 7 put8 7 them8 7 into
8 7 pizza,8 7 we8 7 are87moving8 7 workers8 7 who8 7 are8 7 worse8 7 at8 7 pizza8 7 production8
7 and8 7 better8 7 at8 7 soda8 7 production87than8 7 those8 7 moved8 7 in8 7 the8 7 previous8
7 stage.8 7 This8 7 means8 7 that8 7 the8 7 increase8 7 in8 7 pizza87product87ion8 7 is8 7 diminish
ing8 7 and8 7 the8 7 loss8 7 in8 7 soda8 7 production8 7 is8 7 increasing.8 7 An87economist8 7 woul
d8 7 call8 7 this8 7 an8 7 example8 7 of8 7 increasing8 7 opportunity8 7 cost.8 7 If8 7 the87productio
n8 7 possibilities8 7 frontier8 7 is8 7 a8 7 straight8 7 line8 7 that8 7 is8 7 not8 7 bowed8 7 out
8 7 away87from8 7 the8 7 origin,8 7 then87opportunity8 7 cost8 7 is8 7 constant.
AACSB:87Knowledge87Application87
Accessibility:87Keyboard87Navigation
87Blooms:8 7 Remember
Difficulty:870187Easy87Grade
able:
387|87P87a87
g87e
, automatic
87Learning87Objective:8 7 01-
02
Topic:8 7 Attributes8 7 of8 7 the8 7 Production8 7 Possibilities8 7 Frontier
487|87P87a87
g87e
