A sudden drop in the average consumer income would be an example of which environmental force affecting the factors of production?

• A. Natural force
• B. Technological force
• C. Legal force
• D. Economic force

Answer: (D)

Verified step by step guidance

1. Understand that environmental forces refer to external factors that influence the economy and business environment, including factors that affect the availability and cost of factors of production.
2. Identify the types of environmental forces: Natural (related to natural resources and disasters), Technological (related to innovations and technology changes), Legal (related to laws and regulations), and Economic (related to economic conditions such as income, employment, and inflation).
3. Recognize that a sudden drop in average consumer income directly relates to changes in economic conditions, which influence consumer spending and demand.
4. Connect the drop in consumer income to the Economic force because it affects the purchasing power and overall economic environment impacting factors of production.
5. Conclude that the correct classification of a sudden drop in average consumer income is an Economic force, as it is an economic condition influencing the market.