Accounting Multiple Choice Question – 23 October 2024

Regarding Porter’s Five Forces Analysis and new entrants into a market, which of the following pairs of statements is correct?

Select ONE answer:

Encourages new entrants   Erects a barrier to new entrants

1. High competition Low capital costs
2. Monopoly supplier of vital component High competition
3. One large customer Monopoly supplier of vital component
4. Low competition High capital costs

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > Low levels of competition in an industry make it more attractive for new entrants. High capital costs involve risk and fund-raising challenges which can act as a barrier to new entrants.

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