If a Firm Has Low Fixed Costs Relative to All

question 41

Multiple Choice

If a firm has low fixed costs relative to all other firms in the same industry, a large change in volume (either up or down) would have:

• A) a smaller change in EBIT for the firm versus the other firms.
• B) no effect in any way on the firms as volume does not affect fixed costs.
• C) a decreasing effect on the cyclical nature of the business.
• D) a large change in EBIT for the firm versus the other firms.

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