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1.
Why are economic moats advantageous?
They allow a company to generate profits and keep competitors at bay. Companies that reward investors over the long haul are those that have a durable competitive advantage.
2.
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.
3.
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.
4.
Determining the goal of a business is normally easy.
False. Sometimes it is not easy, because a business might combine different objectives.
5.
Which of these is not a type of economic moat?
Technological expertise. Technological expertise can form the foundation for an economic moat, but it is rare that the expertise provides a sustainable, long-term competitive advantage, because improvements in technology are often easily imitated.
