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1. Which of the following is true when the market is a monopoly?
a. Profits are always positive
b. P > MC
c. P = MR + variable fixed costs
d. All of the above are true for a monopoly
2. Which of the following is true?
a. A company always produces on the inelastic portion of its demand curve
b. A monopolist always earns an economic profit
c. The more inelastic the demand, the lower the price charged to the customer
d. In the short run a company will shut down operations if the price they charge is less than the average variable cost.
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