What Happens to a Firm with High Operating Leverage When

question 47

Multiple Choice

What happens to a firm with high operating leverage when the overall level of sales is very high?

• A) The firm is likely to have higher levels of fixed costs.
• B) The firm is likely to enjoy high profits.
• C) The firm will not break even in accounting terms.
• D) The firm will have a reduced level of depreciation.

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Definitions:

Equally Happy

The notion that people can achieve a similar level of happiness regardless of their varying circumstances or personal characteristics.

Fairly Unhappy

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Gardner's Theory

A theory of multiple intelligences proposed by Howard Gardner, suggesting people have different kinds of intelligences, such as linguistic, logical-mathematical, and spatial.

Spearman's Theory

A theory of intelligence proposing that general intelligence (g factor) underlies all cognitive abilities, thus explaining overall performance on mental ability tests.