Step 1 of 4 a) Degree of operating leverage is an elasticity formula which measures the percentage change in profit resulting from a percentage change
Step 1 of 4 a) Degree of operating leverage is an elasticity formula which measures the percentage change in profit resulting from a percentage change in quantity produced. DOL =- O( P - AVC) O(P - AVC)-TFC 8,000(P - AVC) 1.5 = 8,000( P - AVC) -10,000 8,000(P - AVC) 1.5 = 8,000((P - AVC)-2) How this -2 is derived? Could yoy please help 12,000 ((P - AVC) -2) = 8,000(P - AVC) clarify. 1.5 ((P - AVC)-2) = (P- AVC) 1.5P-1.5AVC-3 = P - AVC
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
