If a Firm Has Low Fixed Costs Relative to All

question 34

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 effect 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 the above.

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Definitions:

Control Group

In experiments, it refers to the group of participants who do not receive the experimental treatment or intervention, serving as a benchmark to measure how the other tested subjects do.

The Experiment

A research method in psychology and the sciences used to determine cause-effect relationships by manipulating variables under controlled conditions.

Level Of Anxiety

The degree or intensity of worry, unease, or nervousness typically about an imminent event or something with an uncertain outcome.

Tendency

An inclination towards a particular characteristic, behavior, or way of doing something.