Question 1)

Consider the following from one of our articles used during the semester: "........the payments industry, once a sleepy backwater of finance that has emerged in the past few years as one of its most exciting sources of growth. Like many finance businesses, fixed costs - namely the required technology investments - are high, while the marginal [variable] costs of processing more transactions are negligible. Companies processing lots of payments therefore enjoy higher margins and can reinvest the profits in better technology to extend their advantage over smaller rivals. ('Payments groups join forces to survive" Financial Times 1 July 2022 adapted) The circumstances outlined above demonstrate: The risks of having a low variable cost per unit of activity The risks associated with lower operating leverage The benefits of lower operating leverage The benefits of higher operating leverage