1. Indicate whether each of the following statements is true or false, and explain why. Do not simply give a corrected statement -- you must provide a full explanation as to why that statement is correct or not.
a) Profit maximization in perfectly competitive and monopoly markets requires setting MR = MC.
b) In monopoly markets, firm and market demand curves always have identical slope.
c) Excess profits in long-run equilibrium are typical of both monopolistically competitive and oligopoly markets.
d) An efficiently functioning cartel achieves the monopoly price/output combination.
e) A high ratio of distribution cost to total cost tends to increase competition by widening the geographic area over which any individual producer can compete.
2. Indicate whether or not each of the following examples of business behavior are legal or illegal under current antitrust law, and mention whether violations under the Sherman Act, Clayton Act, and/or Federal Trade Commissions Act are involved. Explain each answer.
a. Charging higher markups for younger versus older customers.
b. False and misleading advertising.
c. Mergers for monopoly.
d. Charging different markups to various business customers.
e. A business strategy of using patents to limit competition.