Table 3-40 ​

question 323

Multiple Choice

Table 3-40
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-Refer to Table 3-40. Italy should specialize in the production of

• A)boats and import cars.
• B)cars and import boats.
• C)both goods and import neither good.
• D)neither good and import both goods.

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Definitions:

Break-even Sales

The amount of revenue needed to cover both fixed and variable costs, resulting in no profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor directly involved in production.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profits by increasing sales.

Break-even Sales

The amount of revenue needed to cover both the variable and fixed costs of a business, resulting in zero profit or loss.