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 and 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.

Question

Quizplus · Accepted Answer

A virtuous cycle refers to a positive feedback loop where the success of one element leads to the success of another, creating further success. In the case of a firm, if it can attract enough buyers initially, it can increase the usefulness of the product, which in turn attracts even more buyers. This creates a virtuous cycle of increasing sales and profitability for the firm. Option A refers to a different phenomenon (lobbyists influencing Congress), while option B talks about using monopoly profits to create new products, but does not necessarily lead to a virtuous cycle. Option D talks about taking advantage of economies of scale, which can reduce the price of the product to boost sales, but does not necessarily lead to a virtuous cycle unless the reduced price itself attracts more buyers.

A Virtuous Cycle Occurs