If a Firm's Fixed Costs Are Exactly Equal to Its

question 78

Multiple Choice

If a firm's fixed costs are exactly equal to its depreciation expense, and both are greater than zero, then at its cash break-even point the DOL ______________.

• A) Is equal to one.
• B) Is equal to two.
• C) Is greater than two.
• D) Is undefined since you can't divide by zero.
• E) Cannot be determined without more information.

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Definitions:

Pie Graph

A graphical representation of data in a circular chart divided into sectors, where each sector shows the relative size of each value.

Ratio Scale

A measurement scale that possesses a meaningful zero value and allows for comparison of differences and ratios between measurement units.

Interval Scale

A type of scale used for measurement where intervals between values are meaningful and equally spaced, but there is no true zero.

Frequency Polygon

A graphical representation of the distribution of a dataset that shows how often each value occurs, using a line that connects points representative of each frequency.