Use the Production Possibilities Data Below for Lebos and Slavia

question 140

Multiple Choice

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


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

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Definitions:

Total Fixed Costs

Expenses that do not change with the level of production or sales over a short period, including rent, insurance, and salaries.

Activity Level

In cost accounting, this refers to the volume of production or operations, impacting variable costs and potentially influencing budgeting and performance measures.

Contribution Margin

The contribution margin is the difference between sales revenue and variable costs, showing how much revenue contributes to fixed costs and profit.

Variable Costs

Expenditures that fluctuate based on the production levels or the number of sales.