Your "big idea" of computer-aided-design for efficient use of space in hospitals has really taken off. You and your partner worked full time during the summer to meet demand for your service, but now you two are due back in classes: a full five courses per semester you need to graduate. You need to hire design professionals to meet demand for your service - but how many?

Here is a table you've developed of the additional revenue your start-up will generate from adding various numbers of design professionals:

Your work is cloud-based; your start-up has a $25,000 per year subscription to Amazon Web Services to host your work pages. Access to the Amazon suite of tools that you use in your computer-aided-design service will be $13,000 per year per new design professional. You are advertising the job as a $60,000 per year position; with taxes and benefits, that will be a $70,000 charge to the start-up per new design professional. You and your partner do not draw a salary, but you receive the profit from the start-up.

These new professionals are design specialists, but they have never worked with your start-up before. You estimate that each of you will put in extra time during the week supervising these workers; that time commitment is listed in the last column of this table.

Questions:

1. If you wanted to have the highest accounting profit for the start-up, how many design professionals will you hire for the coming year? Explain your reasoning, being sure to define and calculate the accounting profit of your start-up.

2. What is the difference between accounting profit and economic profit in this example? Explain. If you wanted to have the highest economic profit for the start-up, how (if at all) would you change your analysis from what you presented in (1)?