Suppose that installing modern equipment will reduce the variable cost to $$50$ per unit,

but increase the monthly fixed cost to $$30,000.$ Also suppose that the selling price per

unit is p $=$ $$200.$

$($a$)$ Which of these operations $($old versus modern$)$ will have the highest operating

leverage? Explain.

$($b$)$ Which of these operations $($old versus modern$)$ will have the highest business risk?

Explain.

$($c$)$ What is the relationship between high operating leverage and business risk? Discuss

the benefit and danger of the modern plan to justify your answer.