Which of the Following Describes the Impact the Combine Harvester

question 43

Multiple Choice

Which of the following describes the impact the combine harvester had on the economics of American farming in the late nineteenth century?

• A) It increased productivity, which made farming more profitable.
• B) It increased productivity, which drove down agricultural prices.
• C) It made cooperative approaches to selling crops and buying finished goods unnecessary.
• D) It motivated farmers to think of themselves as industrial workers and join unions.

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Definitions:

Operating Leverage

A measure of how sensitive a company’s operating income is to a change in its sales volume, emphasizing the cost structure between fixed and variable costs.

EBIT

A gauge of company profits, Earnings Before Interest and Taxes, leaves out the charges for interest and taxes to show raw earnings.

Sales

The transactions involved in selling goods or services in the normal course of business, generating revenue for the company.

DOL

Degree of Operating Leverage; a measure of a company's fixed costs as a percentage of its total costs, indicating how earnings before interest and taxes (EBIT) change in response to a change in sales volume.