Question

What is monopoly? Explain in detail the features of monopoly? (Answer in detial)

Answer 1

Monopoly can be defined as follows:

Explanation: The term Monopoly can be divided into two parts i.e. 'Mono' and 'Poly' where 'mono; refers to the 'sole' and 'poly' refers to the 'seller'. This means that monopoly refers to the sole seller's control. In brief, it refers to that form of the market in which there are many buyers but a single seller selling the product with no substitutes. Example: Indian Railways.

FEATURES OF MONOPOLY:

• Single seller: There is only one seller selling the products to all the buyers. This means that there is no difference between the firm and industry. He has sole control over the production, pricing etc.

• Large number of buyers: Under this form, there are large number of buyers demanding for the product. This means that an individual doesn't have this much power that they can change the price by changing the demand.
• No close substitutes: This form of market shows no close substitutes of the product sold by the seller to the large number of buyers. The existence of substitute eliminates the existence of monopoly.

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Answer 2

Monopoly:

• A monopoly is a type of market where there is one seller of a product called a monopolist. He has full control over price, demand and supply decisions and thus uses this right to maximize his personal profit.

Features of monopoly:

1. Restriction to Entry-

i) It is not possible for permitting entry into this industry.

ii) Even if a new firm is admitted into this industry, the Monopoly will itself remove it.

2. Price Discrimination-

i) A monopoly has the power to exercise price discrimination.

ii) Price discrimination defines the experience of selling the same commodity to different customers at different prices.

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