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1.
An efficient scale occurs in a limited market being efficiently served by _______.
One or very few companies. The "efficient" part of it means that very few players are needed to keep the market running well.
2.
Why would a company raise its switching costs?
To lock its customers in. The more customers are locked in, the more likely a company can raise prices and still keep them.
3.
Which of the following would not be an intangible asset?
The headquarters building. A headquarters building is tangible, not intangible.
4.
What type of moat are you likely to find in a commodity industry?
Low-cost producer. Low-cost producers in commodity businesses are typically "price-takers," meaning they have little or no pricing power and must accept whatever price the market is offering for their goods or services; they do best if they are low-cost producers in such cases.
5.
A company can achieve the 'network effect' simply by more people using its product or service.
True. As more people use it, its value to the marketplace grows.
6.
What is an economic moat?
A long-term competitive advantage that allows a company to earn oversized profits over time. As a moat, it is 'insulated' against the competition.
