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## ECON 437 Binghamton University International Monetary Economics Problems

### Question Description

1) Suppose Biwei works for one hour and produces a combination of apples and bananas. What isthe opportunity cost of one apple in term of bananas? Draw this PPF in a graph.2) Suppose Biwei only works for one hour and produces a combination of apples and cherries. Whatis the opportunity cost of one apple in term of cherries? Draw this PPF in a graph.3) Suppose Biwei would like to consume a combination of (5a, 10b, 2c), what is the amount of timehe must sacrifice for this production bundle?4) What is the opportunity cost of each good measured in term of time? Fill in the table above5) Suppose the price of an apple Pa=\$10, with a combination of (5a, 10b, 2c) produced, given theopportunity cost of an apple in terms of bananas or cherries calculated in (1) and (2), what wouldbe the price of a banana and the price of a cherry? What is the total market value of this bundle?6) Suppose next year Biweis productivity in apple increases to 12 units per hour while productivityin banana and cherry remains the same, what is the new opportunity cost of an apple in terms ofbananas? And the new opportunity cost of an apple in terms of cherries?

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