Use the information in Exhibit 4 of this chapter to answer the following: 

a. How many employees (operators) would Compute Accounting hire at a weekly wage of $250 if it were attempting to maximize profits? 

b. What would the firm’s maximum profit be if its fixed costs were $1,500 per week?

c. Suppose there were a decline in demand for accounting services, reducing the market price per monthly statement to $150. At this demand level, how many employees would Compute-Accounting hire at $250 per week in the short run? Would Compute-Accounting be able to stay in business at the lower market price? Explain.

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EXHIBIT 4 Employment and the Minimum Wage If the market wage of a group of employees is $7 per hour, a $12 per-hour minimum wage will increase the earnings of workers able to retain their jobs, but reduce the employment opportunities of others as the number of jobs avail- able shrinks from E, to E₁. Wage rate $12 Excess supply E₁ E Employment B S Minimum wage level