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Stocks 205: Economic Moats

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1.
If a company is able to price its products lower than its competition and still make a profit while its competition is in the red, it has what type of moat?
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Low-cost producer. Being a low-cost producer allows companies to price their products at lower levels than the competition, attracting buyers. Likewise, companies with low costs can price their products at the same level as competitors and make a higher profit.
2.
An efficient scale occurs in a limited market being efficiently served by _______.
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One or very few companies. The "efficient" part of it means that very few players are needed to keep the market running well.
3.
There are many ways a company can build a sustainable competitive advantage in its industry. Which of the following is not one of them?
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None of the above. All of these approaches can build a sustainable competitive advantage.
4.
In the language of companies, what are switching costs?
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Expenses incurred to switch over from one product to another. From the company's point of view, these can be a very positive thing.
5.
Which of the following would not be an intangible asset?
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The headquarters building. A headquarters building is tangible, not intangible.
6.
When a manufacturer starts making parts for another manufacturer, that is an example of the network effect.
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True. The first manufacturer would be complementing an existing product and thus raising its value.