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1.
Determining the goal of a business is normally easy.
False. Sometimes it is not easy, because a business might combine different objectives.
2.
Which of these companies best exemplifies the use of the network effect?
EBay. eBay is the quintessential example of a company with a strong network effect.
3.
What is an economic moat?
A long-term competitive advantage that allows a company to earn oversized profits over time. A moat protects the business and does not let other businesses in.
4.
In the terminology of economic moats, a concept developed by Warren Buffett, a moat can be described by which of the following terms?
Both of the above. A moat has width and depth, and these characteristics help describe its value to the business.
5.
High switching costs help companies _______.
Raise prices without the risk of losing customers.
