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.

---

Definitions:

Rational Model

A mathematical model that uses rational expressions to describe relationships between different quantities.

Least Common Denominator

The smallest positive integer that is divisible by each denominator of a set of fractions, facilitating their comparison or summation.

Common Denominator

The shared multiple of the denominators of two or more fractions, used to make their denominators the same for addition or subtraction.

Combine

To combine is to join or merge two or more elements into a single unit or group.