A Virtuous Cycle Occurs

question 251

Multiple Choice

A virtuous cycle occurs

• A)when lobbyists petition members of Congress to grant a public franchise; the lobbyist then raise money for those Congress members who granted the franchise.
• B)when monopoly profits are used to create new products for additional monopoly profits.
• C)when a firm can attract enough buyers initially to increase a product's usefulness to attract even more buyers.
• D)when a firm's sales volume reaches a level where the firm can take advantage of economies of scale; thereby reducing the price of the product to further boost its sales.

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Definitions:

Net Income

The comprehensive earnings of a corporation after expenses and taxes have been taken away from its revenues.

Discount Rate

A rate used to determine the present value of future cash flows, reflecting the time value of money and risk of the cash flows.

Profitability Index

A calculation that determines the relative profitability of an investment, indicating the value created per unit of investment.

Cash Inflows

Funds that enter a business, resulting from sales, financing, or investment returns, contributing to the company's cash balance.