Firm a Employs a High Degree of Operating Leverage; Firm

question 21

Multiple Choice

Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true?

• A)A has a lower break-even point than B, but A's profit grows faster after the breakeven.
• B)A has a higher break-even point than B, but A's profit grows slower after the breakeven.
• C)B has a lower break-even point than A, but A's profit grows faster after the breakeven.
• D)B has a lower break-even point than A, and profit grows the same rate for both companies after the break-even point.

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Definitions:

Venation Patterns

The arrangement of veins in a leaf or insect's wing, which can be used for identification and classification purposes.

Eudicots

One of the two major groups of flowering plants, characterized by having two cotyledons (seed leaves), net-veined leaves, and flower parts usually in multiples of four or five.

Monocots

A group of flowering plants (angiosperms) that have a single embryonic leaf, or cotyledon, in their seeds.

Blade

The broad, flat part of a leaf or similar structure, specialized for photosynthesis in most plants.