1001nmkeyps2

1001nmkeyps2 - ECON 1001 C/D/E/F/G/H/I- INTRODUCTION TO...

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ECON 1001 C/D/E/F/G/H/I- INTRODUCTION TO ECONOMICS I DR. DEMURGER, DR. LO AND DR. WAN ANSWER KEY TO PROBLEM SET #2 HARDCOPY SUBMISSION DEADLINE: 4PM, MONDAY, NOV 03, 2008 Clifford graded question #1 and Jennifer graded question #3. If you have any questions regarding this key, please contact Clifford on givencana@yahoo.ca or Jennifer on efshan@hkucc.hku.hk Question 1 (A) Hours spent writing fictions Total number of words written Revenue earned from writing fictions Hours spent on tutoring Money earned from tutoring Total money earned 0 0 0 8 $12000 $12000 1 100 $800 7 $10500 $11300 2 300 $2400 6 $9000 $11400 3 600 $4800 5 $7500 $12300 4 900 $7200 4 $6000 $13200 5 1125 $9000 3 $4500 $13500 6 1325 $10600 2 $3000 $13600 7 1475 $11800 1 $1500 $13300 8 1575 $12600 0 0 $12600 From the above table, revenue is maximized when Ann spends 6 hours on writing fictions and 2 hours on tutoring. If Ann writes for 6 hours, she will write 1325 words. (B) It takes Ann 4 hours to write 900 words, Total Cost = Variable Cost + Fixed Cost = $1500 X 4 + $500 = $6500 AC = $6500/900 = $7.22 per word TVC = $1500x4 = $6000 AVC = $6000/900 = $6.67 per word
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(C) Hours Total number of words TVC AVC 1 100 1500 15 2 300 3000 10 3 600 4500 7.5 4 900 6000
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1001nmkeyps2 - ECON 1001 C/D/E/F/G/H/I- INTRODUCTION TO...

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