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:

Eight-hour Workday

A labor standard that establishes the maximum number of hours that an employee is expected to work per day, aiming to promote work-life balance.

Labor Union

An organization of workers formed to protect and advance their rights and interests through collective bargaining.

Negotiations

The process of discussing terms and conditions to reach mutual agreement between parties, often used in contract discussions or dispute resolutions.

Strikes

A work stoppage caused by the mass refusal of employees to work, typically as a form of protest to achieve better wages, benefits, or working conditions.