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Atech has fixed costs of $13.5 million and profits of $5 million. Its competitor, ZTech, is roughly the same size and this year earned the
Atech has fixed costs of $13.5 million and profits of $5 million. Its competitor, ZTech, is roughly the same size and this year earned the same profits, $5 million. However, ZTech operates with fixed costs of only $1.00 million but higher variable costs. a. Calculate the operating leverage for each firm. (Round your answers to 2 decimal places.) b. Which firm will likely have higher profits if the economy strengthens? ATech ZTech
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