What is leverage?

Leverage is when you use something small to make something bigger happen, like using a tiny push to lift a heavy object.

Imagine you're playing on a seesaw at the park. If you sit near the edge, it’s easier for your friend to lift you up because leverage helps you go higher with less effort. That’s just like how leverage works in real life, it lets you do more with less.

How Leverage Works

Think of leverage as a kind of helper. When you use a long stick or a lever (like the seesaw), you can push down on one end and lift up something heavy on the other side. The longer the stick, the easier it is to lift things, that’s mechanical advantage in action.

It’s like having a tiny friend who gives you a big boost when you need it most. You don’t have to do all the work yourself, leverage does some of it for you! Leverage is when you use something small to make something bigger happen, like using a tiny push to lift a heavy object.

Imagine you're playing on a seesaw at the park. If you sit near the edge, it’s easier for your friend to lift you up because leverage helps you go higher with less effort. That’s just like how leverage works in real life, it lets you do more with less.

Take the quiz →

Examples

  1. Using a $10 loan to buy $100 worth of toys and selling them for $150
  2. A baker borrows money to buy more ingredients and doubles her profit
  3. A student takes out a small loan to start a side business

Ask a question

See also

Discussion

Recent activity

Categories: Science · leverage· finance· investing