Complete Solution Manual for Foundations of Business, 7th Edition by William M. Pride — All Chapters (1-47) with Answers & Explanations

SOLUTION MANUAL FOR . .




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




Chapter.1-47

Chapter 1 .




End of Chapter Questions
. . .




Quiz.Yourself

1. Scarcity.implies.that.the.allocation.decision.chosen.by.society.can
a) not.make.more.of.any.one.good.
b) always.make.more.of.any.good.
c) typically.make.more.of.one.good.but.at.the.expense.of.making.less.of.anot
her.
d) always.make.more.of.all.goods.simultaneously..Explan
ation:.Scarcity.implies.that.choices.involve.trade-offs.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Und
erstand
Difficulty:.02.Medium.Gradea
ble:.automatic.Learning.Object
ive:.01-01
Topic:.Economics.and.Opportunity.Cost

2. A.production.possibilities.frontier.is.a.simple.model.of
a) allocating.scarce.inputs.to.the.production.of.alternative.outputs.
a) price.and.production/consumption.in.a.market.
b) the.cost.of.producing.goods.
c) the.number.of.inputs.required.to.produce.varying.levels.of.output.. Explanation:.Th
e.production.possibilities.frontier.shows.the.quantity.of.two.goods.that.can.be.produced..It.i
mplies.that.scarcity.requires.that.choices.be.made.as.to.how.to.use.resources.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Und
erstand
Difficulty:.02.Medium.Gradea
ble:.automatic.Learning.Object
ive:.01-01
Topic:.Modeling.Opportunity.Cost.Using.the.Production.Possibilities.Frontier



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RITTEN.CONSENT.OF.MCGRAW.HILL.LLC.

,3. The.underlying.reason.that.there.are.unattainable.points.on.a.production.possibilities.fron
tier.is.that.there
a. is.government.
b. are.always.choices.that.must.be.made.
c. are.scarce.resources.within.a.fixed.level.of.technology.
d. is.unemployment.of.resources.
Explanation:.The.points.outside.the.production.possibilities.frontier.are.unattainable..This.me
ans.that.currently.available.resources.and.technology.are.insufficient.to.produce.amounts.grea
ter.than.those.illustrated.on.the.frontier..On.a.graph,.everything.beyond.the.frontier.is.unattaina
ble.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Rem
ember
Difficulty:.01.Easy.Gradeable:.
automatic.Learning.Objective:.
01-01
Topic:.Modeling.Opportunity.Cost.Using.the.Production.Possibilities.Frontier

4. The.underlying.reason.production.possibilities.frontiers.are.likely.to.be.bowed.out.(rat
her.than.linear).is.because
a. choices.have.consequences.
b. there.are.always.opportunity.costs.
c. some.resources.and.people.can.be.better.used.producing.one.good.rather.tha
n.another.
d. there.is.always.some.level.of.unemployment.
Explanation:.If.the.production.possibilities.frontier.is.not.a.line.but.is.bowed.out.away.from.the.
origin,.then.opportunity.cost.is.increasing..The.reason.for.this.is.that.as.we.add.more.resources.t
o.the.production.of,.for.example,.pizza,.we.are.using.fewer.resources.to.produce.soda..Compo
unding.that.problem,.at.each.stage.as.we.take.the.resources.away.from.soda.and.put.them.into.p
izza,.we.are.moving.workers.who.are.worse.at.pizza.production.and.better.at.soda.production.t
han.those.moved.in.the.previous.stage..This.means.that.the.increase.in.pizza.production.is.dimi
nishing.and.the.loss.in.soda.production.is.increasing..An.economist.would.call.this.an.example.
of.increasing.opportunity.cost..If.the.production.possibilities.frontier.is.a.straight.line.that.is.no
t.bowed.out.away.from.the.origin,.then.opportunity.cost.is.constant.

AACSB:.Knowledge.Application.Acce
ssibility:.Keyboard.Navigation.Blooms:.
Remember
Difficulty:.01.Easy.Gradeable:.
automatic.Learning.Objective:.
01-02
Topic:.Attributes.of.the.Production.Possibilities.Frontier




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RITTEN.CONSENT.OF.MCGRAW.HILL.LLC.

,5. Suppose.you.were.modeling.the.impact.of.the.introduction.of.computer.automation.into.
manufacturing.on.a.production.possibilities.frontier.(PPF).with.two.manufactured.goods.on.
their.respective.axes..It.would.be.more.likely.that.the.result.would.be. .
a) generalized.growth.with.the.PPF.moving.both.up.and.to.the.right.
b) specialized.growth.with.the.PPF.moving.both.up.and.to.the.right.
c) generalized.growth.with.the.PPF.just.moving.up.and.not.to.the.right.
d) specialized.growth.with.the.PPF.just.moving.up.and.not.to.the.right..Explanation:.C
omputer.automation.is.a.general.improvement.in.technology.so.it.would.improve.all.manufa
cturing..As.a.result,.it.would.result.in.generalized.growth.and.move.the.PPF.both.up.and.to.th
e.right.

AACSB:.Knowledge.Application.Acce
ssibility:.Keyboard.Navigation.Blooms:.
Remember
Difficulty:.01.Easy.Gradeable:.
automatic.Learning.Objective:.
01-
03.Topic:.Economic.Growth

6. The.optimization.assumption.suggests.that.people.make
a. irrational.decisions.
b. unpredictable.decisions.
c. decisions.to.make.themselves.as.well.off.as.possible.
d. decisions.without.thinking.very.hard.
Explanation:.The.optimization.assumption.suggests.that.the.person.in.question.is.trying.to.ma
ximize.some.objective..Consumers.are.assumed.to.be.making.decisions.that.maximize.their.
happiness.subject.to.a.scarce.amount.of.money.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Rem
ember
Difficulty:.01.Easy.Gradeable:.
automatic.Learning.Objective:.
01-01
Topic:.Thinking.Economically




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RITTEN.CONSENT.OF.MCGRAW.HILL.LLC.

, 7. Imagine.an.economist.ordering.donuts.one-by-
one..When.deciding.how.many.donuts.to.order.they.would.pick.that.number.where.the.enjoym
ent.of.the.
equals.the.enjoyment.they.could.get.from.using.the.money.on.another.good.
a. first.donut
b. last/marginal.donut
c. average/typical.donut
d. total.number.of.donuts
Explanation:.The.enjoyment.of.the.last.slice.is.the.marginal.benefit.of.that.slice..If.this.enjoyment.is.
more.than.the.enjoyment.from.some.alternative,.more.will.be.consumed.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Und
erstand
Difficulty:.02.Medium.Gradeab
le:.automatic. Learning.Objecti
ve:.01-
04.Topic:.Thinking.Economical
ly

8. Of.course,.all.individual.students.are.better.off.if.they.earn.better.grades..If.you.were.to.co
nclude.that.all.students.would.be.better.off.if.everyone.received.an.A,.you.would
a. have.fallen.victim.to.the.fallacy.of.scarcity.
b. be.right.
c. have.fallen.victim.to.the.fallacy.of.composition.
d. be.mistaking.correlation.with.causation.
Explanation:.The.fallacy.of.composition.is.the.mistake.in.logic.that.suggests.that.the.total.econ
omic.impact.of.something.is.always.and.simply.equal.to.the.sum.of.the.individual.parts.

AACSB:.Reflective.Thinking.Accessibi
lity:.Keyboard.Navigation.Blooms:.Und
erstand
Difficulty:.02.Medium.Gradeab
le:.automatic. Learning.Objecti
ve:.01-
04.Topic:.Thinking.Economical
ly




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RITTEN.CONSENT.OF.MCGRAW.HILL.LLC.