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

Labour-intensive firms generally have high operating leverage, meaning they have a high proportion of fixed costs to variable costs. This can lead to high profitability when sales are high, but also high risk when sales are low, resulting in a low safety margin. Therefore, the correct answer is A - low safety margin and high operating leverage, but low profit potential due to the high degree of risk involved.

Would You Expect the Following to Be High or Low