Vidyalelo
Commerce · Q48

eCommerce

Graduate and Post Graduate · Commerce · question 48

Q48

The threat of new entrants is high when it is:

A.
Hard for customers to enter the market
B.
Hard for competitors to enter the market
C.
Easy for competitors to enter the market
Answer
D.
Easy for customers to enter the market

Answer: Option C

Solution

Answer: Option C
Solution:
The threat of new entrants is high when it is Easy for competitors to enter the market. A high threat of new entrants makes an industry less attractive – there are low barriers to entry. Therefore, new competitors are able to easily enter into the industry, compete with existing firms, and take market share. There is a reduced profit potential as more competitors are in the industry.