Use the Table Below to Answer the Following Question

question 168

Multiple Choice

Use the table below to answer the following question.The table outlines the production possibilities of Slavia and Italia for food and clothing.

The law of comparative advantage suggests that

• A)neither country could gain from trade,even if the costs of transporting the products were zero.
• B)Italia could not gain from trade because it has an absolute advantage in producing both goods.
• C)both countries could gain if Italia traded food for clothing produced in Slavia.
• D)both countries could gain if Slavia traded food for clothing produced in Italia.

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Definitions:

Depreciable Asset

A type of asset that loses value over time due to wear and tear, decay, or obsolescence, which can be accounted for through depreciation.

Indirect Method

A method of preparing the cash flow statement in which net income is adjusted for non-cash transactions and changes in working capital.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of a company.