If a ﬁrm has low ﬁxed costs relative to all other ﬁrms in the same industry, a large change in sales volume (either up or down) would have:

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Low fixed costs mean that a large change in sales volume would have a smaller impact on the firm's EBIT compared to other firms with higher fixed costs. This is because the firm with low fixed costs would not have to bear significant fixed costs even if sales decrease, and would not require a large increase in revenue to cover fixed costs if sales increase. Therefore, the change in EBIT would be relatively smaller for the firm with low fixed costs compared to other firms in the industry.

If a ﬁRm Has Low ﬁXed Costs Relative to All