All Courses > Stocks > 200
Stocks 205: Economic Moats

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
In the language of companies, what are switching costs?
Choose wisely. There is only one correct answer.
Expenses incurred to switch over from one product to another. From the company's point of view, these can be a very positive thing.
2.
Which of the following is unlikely to be an attribute of companies with efficient scales?
Choose wisely. There is only one correct answer.
They are in a rapidly growing market. Being in a rapidly growing market normally means that there is a lot of room for new competitors to come in, and that is not a part of the efficient-scale universe.
3.
When a company tries to differentiate its product from those of its competition by spending money on marketing, it is attempting to create what type of moat?
Choose wisely. There is only one correct answer.
Intangible assets. Marketing is generally done to build brands, and brands are intangible assets.
4.
There are many ways a company can build a sustainable competitive advantage in its industry. Which of the following is not one of them?
Choose wisely. There is only one correct answer.
None of the above. All of these approaches can build a sustainable competitive advantage.
5.
What type of moat are you likely to find in a commodity industry?
Choose wisely. There is only one correct answer.
Low-cost producer. Low-cost producers in commodity businesses are typically "price-takers," meaning they have little or no pricing power and must accept whatever price the market is offering for their goods or services; they do best if they are low-cost producers in such cases.
6.
A company can achieve the 'network effect' simply by more people using its product or service.
Choose wisely. There is only one correct answer.
True. As more people use it, its value to the marketplace grows.