The Degree of Operating Leverage for Geesling Company Is 8

question 119

Multiple Choice

The degree of operating leverage for Geesling Company is 8.0 at 80,000 units of sales.At 80,000 units of sales,the net profit is $10,000.If the sales volume increases to 90,000 units,what is the net profit?

• A) $12,000
• B) $20,000
• C) $22,222
• D) $80,000

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Definitions:

Marginal Rate Of Transformation

The rate at which one good must be sacrificed to produce an additional unit of another good, based on the given technology and resource constraints.

Marginal Rate Of Transformation

The rate at which one good must be sacrificed to produce an additional unit of another good, reflecting the opportunity cost.

Comparative Advantage

A principle that holds that each party should produce the goods or services for which it has the lowest opportunity cost relative to others.

Trade Restriction

Measures implemented by governments to control the amount of trade across borders, including tariffs, quotas, and non-tariff barriers.