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1.
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.
2.
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.
3.
Of the following four questions about business analysis, which one would you most likely need outside help answering?
How well is the business positioned relative to its competitors? For this one, you would need to get information about several other businesses to help you answer it.
4.
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.
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.
