Would you expect the following to be high or low in a labour-intensive firm: (1) operating leverage, (2) safety margin and (3) profit potential?

Question

Quizplus · Accepted Answer

In a labour-intensive firm, operating leverage is low because fixed costs are lower compared to variable costs. The safety margin is high as the firm can adjust labor costs more easily in response to changes in demand. Profit potential is low due to higher variable costs.

Would You Expect the Following to Be High or Low