Use the Production Possibilities Data Below for Austria and Italy

question 62

Multiple Choice

Use the production possibilities data below for Austria and Italy to answer the following question(s) .
Table 2-1

-Refer to Table 2-1. According to the law of comparative advantage, both Austria and Italy could gain if

• A) Austria produced all of the food and clothing and Italy did not produce anything.
• B) Austria specialized in producing clothing, Italy specialized in producing food, and they traded.
• C) Austria specialized in producing food, Italy specialized in producing clothing, and they traded.
• D) Italy and Austria were both were self-sufficient and did not trade.

---

Definitions:

Political Risk

The likelihood of financial loss or other adverse effects on investment outcomes due to political instability, government actions, or geopolitical tensions in a region.

Cultural Issues

Differences in beliefs, values, practices, and behaviors among people from different backgrounds, which can impact interactions and create challenges in various contexts.

Exchange Rates

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.

Cost-Volume Analysis

A financial analytical tool used to determine the effect of changes in a company's sales volume on its costs and profits.