Firm a Produces Semiconductors Using Highly Technical Machinery; Firm B

question 76

Multiple Choice

Firm A produces semiconductors using highly technical machinery; Firm B is a retail clothing store with little use of machinery. Consider which firm employs a higher degree of operating leverage and then answer the following question: "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 at the same rate for both companies after the break-even point.

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Definitions:

Premature Extinction

The phenomenon where species become extinct earlier than they would have naturally due to human activities.

Tropical Deforestation

The clearing away of tropical forests due to logging, agriculture, or other human activities, leading to significant ecological and environmental consequences.

Global Warming

The gradual increase in Earth's average surface temperature, attributed to the greenhouse gas emissions from human activities such as fossil fuel burning and deforestation.

Ecological Services

The benefits that natural ecosystems provide to humans, such as clean water, air purification, pollination of crops, and climate regulation.