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Which is a positive effect of legal environment on business?

Answer and explanation

Correct answer: Clear rules creating a fair business climate

The governing concept is the beneficial role of a stable legal environment. Clear and fairly enforced rules define rights and duties, protect contracts and property, discourage fraud, support fair competition, and make business conditions more predictable. These effects can increase trust among enterprises, investors, employees, and consumers. Therefore, option A is correct because clear rules can create a fair and secure business climate. The remaining options describe harmful or unrelated outcomes: losing all customers reduces demand, machines breaking damages operations, and bad weather belongs to a natural condition rather than a positive legal effect. The answer follows from linking effective law with order, fairness, and confidence.

Related tags

Business-EnvironmentLegal-EnvironmentFair-CompetitionClass-12Legal EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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