When Management Selects Production Technologies That Include a High Proportion

question 56

Multiple Choice

When management selects production technologies that include a high proportion of fixed costs, they:

• A)decrease their DOL.
• B)increase their DOL.
• C)decrease their NPV break-even level of sales.
• D)reduce the NPV of their cash flows.

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Definitions:

Reviewers

Individuals or entities that assess the quality, importance, or usefulness of something, often leading to recommendations or evaluations.

Principal

The original sum of money borrowed in a loan or put into an investment, excluding any interest or dividends.

Market Wage

The prevailing wage rate for labor in a particular market, determined by supply and demand for workers.

Agent

An individual or entity authorized to act on behalf of another person or company in commercial transactions.