A current carrying loop lies on a smooth horizontal plane.Then,

As the loop is placed in horizontal plane, so area vector is along vertical direction. From τ→=I(A→×B→), as A→ is in vertical direction, i would be the plane of loop only. So, option (1) is wrong because for rotation of loop about its own axis τ→ must be along vertical direction. (2) is correct because we can produce torque in the plane of the loop and due to this the loop can tip over.