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.