If a Firm Has Low Fixed Costs Relative to All

question 32

Multiple Choice

If a firm has low fixed costs relative to all other firms in the same industry,a large change in sales volume (either up or down) would have:

• A) a smaller change in EBIT for the firm versus the other firms.
• B) no effect in any way on the firms, as volume does not affect fixed costs.
• C) a decreasing effect on the cyclical nature of the business.
• D) a larger change in EBIT for the firm versus the other firms.
• E) None of these.

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Definitions:

Double Helix

The spiral structure forming the shape of DNA molecules, consisting of two strands wound around each other.

New Strands

Refers typically to the newly synthesized strands of DNA or RNA following replication or transcription processes.

Adenine

One of the four nucleotide bases in DNA and RNA, which pairs with thymine in DNA and uracil in RNA.

Thymine

One of the four nitrogenous bases in DNA, pairing with adenine through hydrogen bonds.