If a Firm's DOL Is 4

question 93

Multiple Choice

If a firm's DOL is 4.0 with a profit of $2,000,000 and depreciation of $500,000,what are its fixed costs?

• A) $5,000,000
• B) $5,500,000
• C) $6,000,000
• D) $7,500,000

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Definitions:

Multiplier

A factor by which an initial change in spending will alter total economic output by a greater amount.

Multiplier Effect

The proportionate increase in final income that results from an injection of spending (initial increase in spending), typically influencing the level of national income and output.

Government Builds

Refer to initiatives or infrastructure projects undertaken by a government to develop or enhance the country's physical assets and services.

Water-treatment Plant

A facility that processes water to remove contaminants and make it safe for drinking and other uses.