All else the same, if a firm revises its production process to use more labour and less machinery, the firm will have an increased degree of operating leverage.

Question

Quizplus · Accepted Answer

Operating leverage decreases when a firm uses more labor (a variable cost) and less machinery (a fixed cost) because operating leverage is higher when a firm has more fixed costs relative to variable costs.

All Else the Same, If a Firm Revises Its Production