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Operating Leverage Will Change When a Firm Alters the Mix

question 73

True/False

Operating leverage will change when a firm alters the mix of capital resources and labour that it uses.


Definitions:

Average Total Cost

The total cost per unit of output, calculated by dividing total costs by the number of units produced.

Variable Labor

The aspect of labor costs that varies with the level of production or business activity within a given period.

Fixed Capital

Refers to the long-term assets used in production, including buildings, machinery, and equipment, which are not frequently replaced.

Total Variable Cost

The total of expenses that change in proportion to the activity or production level of a business.

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