'The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill'.

Which factor of goodwill is highlighted in the given lines?

Market situation

The correct answer is option 1- Market situation.

Market situation is highlighted in the given lines.

Market situation: The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill.

OTHER OPTIONS

• Nature of business: A firm that produces high value added products or having a stable demand is able to earn more profits and therefore has more goodwill.
• Location: If the business is centrally located or is at a place having heavy customer traffic, the goodwill tends to be high.
• Efficiency of management: A well-managed concern usually enjoys the advantage of high productivity and cost efficiency. This leads to higher profits and so the value of goodwill will also be high.