The Price of Prescription Medicine Is High, Partly Because When

question 59

Multiple Choice

The price of prescription medicine is high, partly because when someone is sick there is no real alternative to buying medicine if they want to get better. Which of Porter's five forces explains how this aspect of the prescription medicine industry helps keep profitability high?

• A) rivalry among existing firms
• B) threat of new entrants
• C) threat of substitutes
• D) bargaining power of buyers
• E) bargaining power of suppliers

---

Definitions:

Customer Account Balances

The amounts owed to a company by its customers for goods or services delivered on credit.

Adjusting Entries

Entries made in the accounting records to realign the balances of accounts before financial statements are prepared.

Accrued Expense

An expense that has been incurred but not yet paid, recognized on the financial statements.

Long-Lived Asset

An asset expected to provide economic benefits over a period longer than one year, such as buildings or machinery.