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:

Advertising

The activity or profession of producing advertisements for commercial products or services, aiming to influence consumer behavior and preferences.

Sales Promotions

Short-term marketing strategies aimed at stimulating interest, demand, or purchase of a product or service.

Coastal Sightseeing

A tourist activity focused on exploring and enjoying the scenic views and natural features along coastlines.

Lagged Effect

The delayed response or impact that occurs after the initial occurrence of an event, often seen in marketing and economics.