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 or Jennifer on 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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