[OS X TeX] eps problem

[Joel Anderson]

Dear Experts,

All of a sudden, TeXShop won't recognize eps files.  For example the  
file

\documentclass{laexam}
\usepackage{graphicx}

  \begin{document}

  \includegraphics[scale=.6]{abcd.eps}

  \end{document}

produces the error:

! LaTeX Error: Unknown graphics extension: .eps.


This occurs both on my machine at home and the one at work.

I hope someone can help.

Joel Anderson