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Stocks 205: Economic Moats

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1.
What is an economic moat?
Choose wisely. There is only one correct answer.
A long-term competitive advantage that allows a company to earn oversized profits over time. As a moat, it is 'insulated' against the competition.
2.
Having an efficient scale also means having a wide moat.
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False. Although there are some efficient-scales with wide moats, the majority of them have narrow moats.
3.
Harley-Davidson has what type of economic moat?
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Intangible assets. Harley's brand is an intangible asset that is a sustainable competitive advantage.
4.
A company can achieve the 'network effect' simply by more people using its product or service.
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True. As more people use it, its value to the marketplace grows.
5.
In the language of companies, what are switching costs?
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Expenses incurred to switch over from one product to another. From the company's point of view, these can be a very positive thing.
6.
How can a low-cost producer achieve a barrier to entry?
Choose wisely. There is only one correct answer.
All of the above. These are all ways that a low-cost producer can achieve barriers to entry.