WorkHere provides working space at a price of $40 per day to individual workers and small companies. The marginal cost of providing utilities and maintaining cleanliness is $20 per day for each workspace. You have been asked to invent a pricing analysis for WorkHere. After careful economic investigation, you determine that the absolute value of the elasticity of demand for WorkHere's services is 3.

a) Is WorkHere charging the profit-maximizing price, or should it charge more, or maybe even less?

b) Suppose WorkHere's marginal costs increased by 20 percent. What happens to the profit-maximizing price? Does it increase by 20 percent too?

c) What else you need to know to be sure that WorkHere will be a profitable company in the long run?