Choose wisely. There is only one correct answer to each question.
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1.
High switching costs help companies _______.
Raise prices without the risk of losing customers.
2.
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.
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.
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.
5.
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.
