What is the criteria for choosing the Time Limits on a program?

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I was trying to solve the CAO Stage 2 problem in the September Challenge. However, it shows that my solution timed out. The time limit for the problem is 1 secs and I got TLE. However, some submitted their solutions in C++ 4.3.2 only and their solution was accepted despite the fact that they took anywhere in between 0.00 to 6.45 secs. So, how is the Time limit decided?

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@paulrishav93 : The time limit given applies to one “testfile” which follows the constraints given in the problem . However there are many “testfiles”'s for a given problem and the time taken shown for accepted solution is the sum of time taken for all the “testfile”'s . Even if your program exceeds time limit on any one “testfile” you will get TLE .

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Thanks a lot for the info