When a Firm Has Fixed Operating Costs, Operating Leverage Is

question 182

True/False

When a firm has fixed operating costs, operating leverage is present. In that case, an increase in sales results in a more-than-proportional increase in EBIT, and a decrease in sales results in a more-than-proportional decrease in EBIT.

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Definitions:

Aversive Conditioning

A type of conditioning where an unpleasant or painful stimulus is used to reduce the occurrence of an unwanted behavior.

Stress-inoculation Therapy

A psychotherapy method that helps individuals develop coping mechanisms to deal with future stressors, thereby reducing their impact.

Rational-emotive Therapy

A form of cognitive-behavioral therapy developed by Albert Ellis that focuses on identifying and changing irrational beliefs that cause emotional and behavioral issues.

Cognitive Therapy

A type of psychotherapy that aims to change negative patterns of thinking, helping patients to deal with problems in a more positive way.