In Discussions of Barriers to Entry, What Is Meant by the Term

question 136

Multiple Choice

In discussions of barriers to entry, what is meant by the term "virtuous cycle"?

• A)A virtuous cycle refers to successful research and development that leads to information that is used to develop other new products.
• B)A virtuous cycle refers to a firm using the profits from a monopoly in one market to establish a monopoly in another market.
• C)A virtuous cycle refers to the situation where the pursuit of self-interest in establishing an entry barrier leads to an increase in social welfare (the "invisible hand").
• D)A virtuous cycle refers to a situation where if a firm can attract enough customers initially, it can attract additional customers because its product's value has been increased by other customers using it, which attracts even more customers.

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Definitions:

Gold Coins

These are coins made primarily or exclusively of gold, often used historically as currency and currently as investment or collectible items.

Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, set by central banking authorities.

Gold Coins

A type of currency made from gold, used historically as a medium of exchange and a store of value.

Small Denomination Time Deposits

Savings accounts or certificates of deposit in banks that have smaller balances and are subject to a specified time frame before withdrawal.