We analyze theoretically the nonlinear phenomenon of optical bistability inside a ring resonator formed with a silicon-waveguide nanowire and derive an exact parametric relation connecting the output intensity to the input intensity. Our input-output relation accounts for linear losses, the Kerr nonlinearity, two-photon absorption, free-carrier-induced absorption and dispersion, and thermo-optic effects within the resonator. Based on our study, we generalize the standard definition of effective length to allow for all possible losses within a silicon ring resonator. We also present a simplified version of the bistable phenomenon valid for resonators operating in a regime in which losses resulting from two-photon absorption are relatively small. Our analytical results provide clear insight into the physics behind optical bistability and may be useful for designing silicon-based optical memories.