For a firm with a DOL of 3.5, an increase in sales of 6 percent will:

A) decrease pretax profits by 3.5 percent.
B) increase pretax profits by 1.71 percent.
C) increase pretax profits by 3.5 percent.
D) increase pretax profits by 21.0 percent.

Ans: D) increase pretax profits by 21.0 percent.

Business

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Indicate whether the statement is true or false.

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