Early Entrants to a Market That Are Able to Create

question 61

Multiple Choice

Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on:

• A) first-mover advantages.
• B) pioneering costs.
• C) economies of scale.
• D) late-mover advantages.

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Definitions:

Loanable Funds

The money available for borrowing in the financial markets, determined by the savings of individuals and institutions and the willingness to lend.

Interest Rate

The percentage at which interest is charged or paid on a sum of money over a period of time.

Loanable Funds

This refers to the total amount of funds available for borrowing in the financial markets, determined by the saving rate and investment demands.

Equilibrium Interest Rate

The rate of interest where the quantity of money sought equals the amount available, equilibrating investment and savings across the economy.