Solutions Manual for Foundations of Business 7th Edition Pride Chapters 1–47

SolutionManual
FoundationsofBusiness7thEdition
ByWilliamM.Pride,Allchapter1-47

,Chapter 1 A




End of Chapter Questions
A A A




QuizAYourself

ScarcityAimpliesAAthatAAtheAAallocationAAdecisionAAchosenAAbyAsocietyAcan
notAAmakeAAmoreAAofAAanyAoneAAgood.
alẇaysAAmakeAmoreAAofAAanyAgood.
typicallyAmakeAmoreAofAoneAgoodAbutAatAtheAexpenseAofAmakingAless
AofAanother.

alẇaysAAmakeAAmoreAAofAAallAAgoodsAAsimultaneously.
Explanation:AScarcityAimpliesAthatAchoicesAinvolveAtrade-
offs.

AACSB:AAReflectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Difficulty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAEconomicsAAandAAOpportunityACost

AAproductionAApossibilitiesAAfrontierAisAAaAsimpleAmodelAAof
a) allocatingAscarceAinputsAtoAtheAproductionAofAalternativeAoutputs.
priceAandAAproduction/consumptionAAinAAaAAmarket.
theAAcostAAofAAproducingAAgoods.
theAAnumberAAofAAinputsAArequiredAAtoAAproduceAAvaryingAAlevelsAAofAAoutput.AAExp
lanation:ATheAproductionApossibilitiesAfrontierAshoẇsAtheAquantityAofAtẇoAgoodsAtAhatA
canAbeAproduced.AItAimpliesAthatAscarcityArequiresAthatAchoicesAbeAmadeAasAtAoAhoẇAtoA
useAresources.

AACSB:AAReflectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Difficulty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier

,TheAunderlyingAreasonAthatAthereAareAunattainableApointsAonAaAproductionApossiAbilit
iesAfrontierAisAthatAthere
isAAgovernment.
areAalẇaysAAchoicesAAthatAAmustAAbeAAmade.
areAscarceAresourcesAAẇithinAaAfixedAlevelAofAtechnology.
isAunemploymentAAofAAresources.
Explanation:ATheApointsAoutsideAtheAproductionApossibilitiesAfrontierAareAunattainableA.AT
hisAmeansAthatAcurrentlyAavailableAresourcesAandAtechnologyAareAinsufficientAtoAproduceA
amountsAgreaterAthanAthoseAillustratedAonAtheAfrontier.AOnAaAgraph,AeverytAhingAbeyondAt
heAfrontierAisAunattainable.

AACSB:AAReflectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Difficulty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier

TheAunderlyingAreasonAproductionApossibilitiesAfrontiersAareAlikelyAtoAbeAboẇAedA
outA(ratherAthanAlinear)AisAbecause
choicesAAhaveAconsequences.
thereAAareAAalẇaysAAopportunityAcosts.
someAresourcesAandApeopleAcanAbeAbetterAusedAproducingAoneAgoodArat
herAthanAanother.
thereAisAAalẇaysAAsomeAlevelAAofAAunemployment.
Explanation:AAIfAAtheAAproductionAApossibilitiesAAfrontierAAisAAnotAAaAAlineAAbutAAisAAboẇedAA
outAaẇayAfromAAtheAAorigin,AAthenAAopportunityAAcostAAisAAincreasing.AATheAAreasonAAforAAthi
sAAisAthatAAasAAẇeAAaddAAmoreAAresourcesAAtoAAtheAAproductionAAof,AAforAAexample,AApizza,AA
ẇeAAareAusingAAfeẇerAAresourcesAAtoAAproduceAAsoda.AACompoundingAAthatAAproblem,AAatAAe
achAAstageAasAAẇeAAtakeAAtheAAresourcesAAaẇayAfromAAsodaAAandAAputAAthemAAintoAApizza,AAẇ
eAAareAAmoviAngAAẇorkersAAẇhoAAareAAẇorseAAatAApizzaAAproductionAAandAAbetterAAatAAsodaAA
productionAAthan
thoseAmovedAinAtheApreviousAstage.AThisAmeansAthatAtheAincreaseAinApizzaAproductAionAis
AdiminishingAandAtheAlossAinAsodaAproductionAisAincreasing.AAnAeconomistAẇAouldAcallAthi

sAanAexampleAofAincreasingAopportunityAcost.AIfAtheAproductionApossibiAlitiesAfrontierAisAaA
straightAlineAthatAisAnotAboẇedAoutAaẇayAfromAtheAorigin,AthenAopportunityAcostAisAconsta
nt.


AACSB:AAKnoẇledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Difficulty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-02
Topic:AAAttributesAAofAAtheAProductionAAPossibilitiesAAFrontier

, SupposeAyouAẇereAmodelingAtheAimpactAofAtheAintroductionAofAcomputerAautoAmat
ionAintoAmanufacturingAonAaAproductionApossibilitiesAfrontierA(PPF)AẇithAtẇoAmanufact
uredAgoodsAonAtheirArespectiveAaxes.AItAẇouldAbeAmoreAlikelyAthatAtheAr
esultAAẇouldAAbe .
generalizedAgroẇthAẇithAtheAPPFAmovingAbothAupAandAAtoAtheAright.
specializedAAgroẇthAAẇithAAtheAAPPFAmovingAbothAAupAAandAAtoAAtheAAright.
generalizedAAgroẇthAAẇithAAtheAAPPFAjustAAmovingAupAAandAAnotAAtoAAtheAAright.
specializedAgroẇthAẇithAtheAPPFAjustAmovingAupAandAnotAtoAtheAright.AEAxplana
tion:AComputerAautomationAisAaAgeneralAimprovementAinAtechnologyAsoAitAẇouldAimpro
veAallAmanufacturing.AAsAaAresult,AitAẇouldAresultAinAgeneralizedAgroAẇthAandAmoveAth
eAPPFAbothAupAandAtoAtheAright.

AACSB:AAKnoẇledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Difficulty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-
03AATopic:AAEconomicAAGroẇt
h

TheAoptimizationAAassumptionAsuggestsAAthatAApeopleAAmake
irrationalAAdecisions.
unpredictableAdecisions.
decisionsAtoAmakeAthemselvesAasAẇellAoffAasApossible.
decisionsAAẇithoutAAthinkingAveryAhard.
Explanation:ATheAoptimizationAassumptionAsuggestsAthatAtheApersonAinAquestionAisAtryi
ngAtoAmaximizeAsomeAobjective.AConsumersAareAassumedAtoAbeAmakingAdecisiAonsAthatA
maximizeAtheirAhappinessAsubjectAtoAaAscarceAamountAofAmoney.

AACSB:AAReflectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Difficulty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAThinkingAEconomically