Multiple Choice
Which of the following best describes the difference between positive and normative analysis in economics?
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0. Basic Principles of Economics
Positive and Normative Analysis
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Which one of the following factors is included in the assessment of political risk levels?
A
Marginal cost of production
B
Consumer preferences for luxury items
C
Stability of government institutions
D
Elasticity of demand for consumer goods
Verified step by step guidance1
Understand that political risk refers to the likelihood that political decisions, events, or conditions will affect the business environment or economic stability in a country.
Identify factors that relate to the political environment, such as government stability, regulatory changes, or political violence, which can impact investment and operations.
Recognize that 'Stability of government institutions' directly relates to political risk because stable institutions reduce uncertainty and risk for businesses and investors.
Note that 'Marginal cost of production' and 'Elasticity of demand for consumer goods' are economic factors related to production and market behavior, not political risk.
Understand that 'Consumer preferences for luxury items' reflect market demand and consumer behavior, which are unrelated to political risk assessment.
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