Which statement is true?

A. A business with high operating leverage tends to be a capital intensive firm.
B. An online marketplace business tends to have very high operating leverage.
C. Regulations that constrain businesses add little value to businesses.

Correct Answer: B

A is false. These 2 concepts are not the same. For example, a software company has high operating leverage but it is not capital intensive.

B is true. The term "high operating leverage” is used to describe companies with relatively high fixed costs.

C is false. Such barriers can protect a business's profit margins.