A Firm with High Operating Leverage Is Expected To

question 65

Multiple Choice

A firm with high operating leverage is expected to:

• A)Have high variable costs
• B)Have low fixed costs
• C)Have a high degree of profitability
• D)Perform better when sales are high

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Definitions:

Net Supplier

An entity that provides more of a good or service to the market than it consumes from it.

Normal Good

A category of product that sees a rise in demand as the consumer's income grows, indicating a direct correlation between income levels and demand.

Backward-Bending

Refers to the backward-bending supply curve of labor, indicating that beyond a certain wage level, labor supply decreases as income and substitution effects impact workers' willingness to work.

Endowed

Provided or supplied with a particular talent, quality, or asset.