BETA Sells Its Single Product for $14 Per Unit, and Its

question 37

Multiple Choice

BETA sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:
If BETA increases its volume of sales by 10%, what will happen to its degree of operating leverage?

• A) It will decrease
• B) It will increase
• C) It will stay the same
• D) Cannot be determined

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Equilibrium Wage Rate

The wage rate at which the supply of labor is equal to the demand for labor in the labor market.

Economic Rents

Payments to a factor of production in excess of what is needed to keep that factor in its current use, often due to limited supply or unique attributes.

Wage Rate

The standardized amount of compensation an employee receives from an employer in exchange for their labor, typically expressed per hour or year.