Which of the following microeconomic factors most strongly indicate that a business is likely to be successful?

• A. Government intervention and macroeconomic stability
• B. High fixed costs and low consumer interest
• C. High demand for the product and low competition in the market
• D. Low demand for the product and high competition in the market

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the key microeconomic factors that influence business success. These typically include demand for the product, competition in the market, costs, and consumer preferences.
2. Step 2: Analyze the role of demand. High demand for a product means more potential customers, which generally increases the likelihood of business success.
3. Step 3: Consider the impact of competition. Low competition means fewer rivals, which can allow a business to capture a larger market share and maintain higher prices.
4. Step 4: Evaluate other options given, such as government intervention and macroeconomic stability, which are more macroeconomic factors and less directly related to individual business success.
5. Step 5: Conclude that the combination of high demand and low competition is the strongest microeconomic indicator of a business's potential success, as it directly affects sales volume and profitability.