Which of the Following Statements Is CORRECT? as a Firm

question 11

Multiple Choice

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

• A) normally lead to an increase in its fixed assets turnover ratio.
• B) normally lead to a decrease in its business risk.
• C) normally lead to a decrease in the standard deviation of its
• Expected EBIT.
• D) normally lead to a decrease in the variability of its expected EPS.
• E) normally lead to a reduction in its fixed assets turnover ratio.

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Definitions:

Human Institution

A complex structure comprising norms, behaviors, and activities developed by humans to meet societal needs, such as family, education, and government.

Salutary Neglect

Informal British policy during the first half of the eighteenth century that allowed the American colonies considerable freedom to pursue their economic and political interests in exchange for colonial obedience.

Task System

A labor system in which enslaved people were assigned specific tasks to complete every day, after which they had some degree of autonomy.

British Government

The political system in the United Kingdom, consisting of the monarch, the Parliament, and the Prime Minister.