1.3. 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.