What Happens to a Firm with High Operating Leverage When

question 87

Multiple Choice

What happens to a firm with high operating leverage when the overall level of sales is very high?

• A)the firm has higher levels of fixed costs.
• B)the firm will enjoy high profits.
• C)the firm will not break even in accounting terms.
• D)the firm will have a reduced level of fixed costs.

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Definitions:

Complementary Goods

Goods or services that are frequently utilized in conjunction with each other, leading to a scenario where the desire for one boosts the desire for the other.

Substitute Goods

Products or services that can be used in place of each other because they satisfy similar customer needs or desires.

Blu-Ray Players

Devices designed to play Blu-ray discs, which provide high-definition video and have more storage capacity than traditional DVDs.

Supply Curve

A visual diagram that illustrates the connection between a product's price and the amount of the product that sellers are prepared to offer.