A negative DOL indicates the percentage ____ in operating losses that occurs as the result of a 1% increase in output.
A) increase
B) reduction
C) change
D) None of these are correct

Question

Quizplus · Accepted Answer

A negative DOL means that the firm's operating income decreases as output increases. Therefore, a 1% increase in output results in a reduction in operating income, leading to a negative DOL.

A Negative DOL Indicates the Percentage ____ in Operating Losses