Suppose a firm increases its sales using existing fixed assets. Everything else equal, what effect will the increase in sales have on the firm's degree of operating leverage (DOL)?
A. The DOL should increase.
B. The DOL should decrease.
C. The DOL should not change, because the amount of fixed asset does not change.
D. The DOL should increase if fixed operating costs represent a significant proportion of total operating costs; otherwise, the DOL should decrease.
E. Because the fixed operating costs are not know, the impact on DOL cannot be determined.
Answer: B
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In 1996, the population of a country was estimated at 4 million. For any subsequent year the population P(t) in million is , where t is the number of years since 1996. Use a graphing calculator to estimate the population in 2005. Round your answer to the nearest thousand.
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