The Degree of Operating Leverage Has Which of the Following

question 8

Multiple Choice

The degree of operating leverage has which of the following characteristics?

• A) The closer the firm is operating to breakeven quantity,the smaller the DOL.
• B) A change in quantity demanded will produce the same percentage change in EBIT as an identical change in price per unit of output,other things held constant.
• C) The DOL is not a fixed number for a given firm,but will depend upon the time zero values of the economic variables Q (Quantity),P (Price),and V (Volume).
• D) The DOL relates the change in net income to the change in net operating income.
• E) If the firm has no debt,the DOL will equal 1.

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Definitions:

Endocrine Cells

Cells that release hormones directly into the bloodstream to regulate body functions.

Small Intestine

A part of the digestive system where most of the digestion and absorption of nutrients and minerals from food takes place.

Chymotrypsinogen

Chymotrypsinogen is an inactive precursor (zymogen) of the digestive enzyme chymotrypsin, which is produced by the pancreas.

Trypsin

An enzyme produced in the pancreas and secreted into the small intestine, where it plays a crucial role in the digestive process by breaking down proteins into amino acids.