The Degree of Operating Leverage Has Which of the Following

question 1

Multiple Choice

The degree of operating leverage has which of the following characteristics?

• A)The closer the firm is operating to the breakeven quantity, the smaller the DOL.
• B)A change in quantity demanded will produce the same percentage change in EBIT as an identical change in price per unit of output, other things held constant.
• C)The DOL is not a fixed number for a given firm, but will depend upon the time zero values of the economic variable Q (Quantity), P (Price), and V (Volume).
• D)The DOL relates the change in net income to the change in operating income.
• E)If the firm has no debt, the DOL will equal 1.

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Definitions:

Little or No Pressure

A situation where there are minimal external forces compelling an individual to act in a particular manner, often leading to a more authentic choice or action.

Causes of Groupthink

Factors leading to a situation in group decision-making processes where the desire for harmony or conformity results in an irrational or dysfunctional decision outcome.

Cohesiveness

The quality of being united, integrated, or working together harmoniously as a group or team, enhancing collective efficacy and morale.

Biased Leadership

Leadership influenced by personal prejudice or favoritism towards certain people, ideas, or outcomes, potentially leading to unfair decision-making.