What Happens to a Firm with High Operating Leverage When

question 57

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:

Pregnant

The state of carrying a developing embryo or fetus within the female body.

Fertility

The natural capability to produce offspring, a significant factor in reproduction among humans, animals, and plants.

Menopause

The time in a woman's life, typically between the ages of 45 and 55, when her menstrual periods cease and she can no longer conceive.

Internalize

The process of adopting the norms, attitudes, and behaviors of one's culture or society as one's own.