Firms 1 and 2 Compete in a Cournot Duopoly

question 19

Multiple Choice

Firms 1 and 2 compete in a Cournot duopoly.If firm 2 adopts a strategy that raises firm 1's marginal cost:

• A) firm 1 will increase its output.
• B) firm 2 will gain market share.
• C) firm 2 will enjoy lower profits.
• D) All of the statements associated with this question are correct.

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Definitions:

Depth-Of-Processing

Refers to the idea that information is more likely to be remembered depending on the level of cognitive processing it undergoes, with deeper, more meaningful processing leading to better retention.

Encoding-Specificity

The principle that memory retrieval is most effective when the cues at the time of recall match those present during encoding.

Retrieval Cues

Stimuli or signals that can prompt the recall of information stored in memory, facilitating access to particular pieces of information.

Context Reinstatement

A way of improving retrieval by re-creating the state of mind that accompanied the initial learning.