1- Assume that there are two firms in an industry where demand has been falling over time due to factors outside the control of the industry. Due to this both firms have been operating at a loss. Will a merger between the two firms, and the resulting increase in concentration and market power for the merged firm lead to the merged firm operating at a profit? Please explain.

2- Alpha Industries operates in a highly competitive market. While there are few other firms in the industry due to the high fixed costs of building plants, rival firms are very aggressive in their pricing strategies. Of the products sold in the industry, over 80 percent have 10 years of patent protection remaining. Does this industry meet an economist's definition of a perfectly competitive industry? Please give an explanation.