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1.
Which of the following questions will not likely help you analyze a business?
None of the above. All of the above are good questions to ask in business analysis. There are hundreds more, of course. But these are a good start.
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.
Why might a restaurant company be unlikely to ever have anything more than a narrow moat?
Because consumer switching costs are so low. Many restaurants are quite profitable, and not all of them spend money on branding. Still, there is a lot of competition in the industry, and it's very easy to walk across the street to a rival restaurant, so the switching costs are very low.
4.
High switching costs help companies _______.
Raise prices without the risk of losing customers.
5.
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.
