A firm that employs relatively large amounts of labor- saving equipment in its operations will have a relatively ____ degree of operating leverage.
A) low
B) constant
C) insignificant
D) high

Question

Quizplus · Accepted Answer

Operating leverage refers to the degree to which fixed costs are used in a company's operations. A firm that employs a large amount of labor-saving equipment, which is a type of fixed cost, will have a higher degree of operating leverage, as the fixed costs will be a larger proportion of the total costs.

A Firm That Employs Relatively Large Amounts of Labor- Saving