OceanGate sells external hard drives for $173 each. Its total fixed costs are $26 million, and its variable costs per unit are $121. The corporate tax rate is 47%. If the economy is strong, the firm will sell 8 million drives, but if there is a recession, it will sell only half as many.

a. What will be the percentage decline in sales if the economy enters a recession?

b. What will be the percentage decline in profits if the economy enters a recession?

c. Calculate the operating leverage of this firm?