Firm a Produces Semiconductors Using Highly Technical Machinery; Firm B

question 76

Multiple Choice

Firm A produces semiconductors using highly technical machinery; Firm B is a retail clothing store with little use of machinery. Consider which firm employs a higher degree of operating leverage and then answer the following question: "Which of the following comparative statements about firms A and B is true?"

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

---

Definitions:

Beeping Sound

A type of auditory signal or notification often used by devices to attract attention or indicate an alert.

Electric Shock

A sudden discharge of electricity through a part of the body causing injury or neurological disturbance.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response, typically as a result of the conditioned stimulus being presented without reinforcement.

Classical Conditioning

A learning process in which a neutral stimulus comes to elicit a response after being paired with a stimulus that naturally elicits that response.