Firm a Employs a High Degree of Operating Leverage; Firm

question 81

Multiple Choice

Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true?

• A) Firm A has a lower break-even point than Firm B, but Firm A's profit grows faster after the breakeven.
• B) Firm A has a higher break-even point than Firm B, but Firm A's profit grows slower after the breakeven.
• C) Firm B has a lower break-even point than Firm A, but Firm A's profit grows faster after the breakeven.
• D) Firm B has a lower break-even point than Firm A, and profit grows the same rate for both companies after the break-even point