Non-economic factors that influence the location of firms include ________

Analyze the question: It asks for a non-economic factor that influences where a firm is located. So we need to separate factors based on cost, market and production (economic) from factors based on politics, personal preference or government decisions (non-economic).

Concept: Factors influencing the location of firms fall into two groups.

Economic factors (related to cost, production and sales):

• Availability of raw materials
• Market (population of buyers)
• Power supply (electricity, fuel)
• Transport and communication facilities (roads, rail)
• Labour supply, capital and water

Non-economic factors (not driven mainly by cost or profit):

• Government policy and political influence (for example, siting industries in particular regions for political balance)
• Personal or family reasons of the entrepreneur
• Security and climate
• Social and cultural considerations

Step-by-step evaluation:

• A. Existence of required materials for production: This is an economic factor, because raw materials affect production costs.
• B. Availability of a population of buyers: This is an economic factor, because it concerns the market.
• C. Adequate supply of power, good road and rail network: This is an economic factor, because it concerns infrastructure and cost.
• D. The activities of politicians in deciding location of firms: This is a political, non-economic factor. Politicians may site a firm in a particular area for political reasons, not because of cost or profit.

Answer: The correct option is D.

Exam tip: Remember "cost, market, materials, power, transport" as economic factors. If the option mentions politics, government influence, personal choice or sentiment, it is non-economic.