College Name And Address

- Power Point Presentation -

Student Name :
Class :
Roll No. :
Division :
Subject : Business Economics-
Semester :
Academic Year :
Teacher’s Name :
Date :
 Monopoly Market
Meaning:
• The word monopoly has been derived from the combination of two words
i.e., ‘Mono’ and ‘Poly’. Mono refers to a single and poly to control.
• In this way, monopoly refers to a market situation in which there is only one
seller of a commodity.
Definitions:
• “Pure monopoly is represented by a market situation in which there is a
single seller of a product for which there are no substitutes; this single seller
is unaffected by and does not affect the prices and outputs of other products
sold in the economy.” Bilas
 Features Of Monopoly Market
1.Single seller and several buyers :
The primary feature of a monopoly is a single seller and several
buyers. Also, in a monopoly, there is no difference between the
firm and the industry.
This is because there is only one producer and/or seller. Therefore,
the firm’s demand curve is the industry’s demand curve. Since there
are several buyers, an individual buyer cannot affect the price in a
monopoly market.
 2.No Close Substitute :
In a monopoly, the product that the monopolist produces has no close
substitute. If a close substitute exists, then the monopoly cannot exist.
Remember, a monopoly can only exist when the cross-elasticity of the
product that the monopolist produces is zero. Therefore, the monopolist can
determine the price of his own choice and refuse to sell below the
determined price.
3 .No Distinction Between Firms And Industry :
Since there is only one seller, there is no distinction between
the firm and the industry. The firm itself becomes the industry
for that type of product.Under monopoly there Is only one firm
which constitutes the industry. Difference between firm and
industry comes to an end.
 4. Strong Barriers To The Entry Of New Firms:
Even if the monopolist firm is earning super-normal profits, new
firms face many hurdles in trying to enter the industry. There are
many reasons for this like legalbarriers, technology, or a
naturallyoccurring substance which others cannot find. Sometimes,
the monopolist works in a small market making it economically
challenging for new firms to enter.
 5. Price Maker :
Under monopoly, monopolist has full control over the supply of
the commodity. But due to large number of buyers, demand of any
one buyer constitutes an infinitely small part of the total demand.
Therefore, buyers have to pay the price fixed by the monopolist.
 Types Of Monopoly Market

1. Simple Monopoly and 2. Pure Monopoly and Imperfect

Discriminating Monopoly:
A simple monopoly firm charges a
uniform price for its output sold to all the
buyers. While a discriminating
monopoly firm charges different prices
for the same product to different buyers.
A simple monopoly operates in a single
market a discriminating monopoly
operates in more than one market
firm which produces a commodity having
Monopoly:
Pure monopoly is that type of monopoly
in which a single firm which controls the
supply of a commodity which has no
substitutes not even a remote one. It
possesses an absolute Monopoly power.
Such a Monopoly is very rare. While
imperfect monopoly means a limited
degree of Monopoly. It refers to a single
no close substitutes.
 Types Of Monopoly Market
3. Natural Monopoly:
When a Monopoly is established
due to natural causes then it is
called natural monopoly. To-day
India has got Monopoly in mica
production and Canada has got
Monopoly in nickel production.
These Monopoly natures has
provided to these countries.
4. Legal Monopoly:
When legal monopolies emerge on
account of legal provisions like
patents, trade-marks, copyrights etc.
The law forbids the potential
competitors to imitate the design and
form of products registered under the
given brand names, patent or trade-
marks.
 Types Of Monopoly Market

5. Industrial Monopolies or Public Monopolies:

In the general interest of the nation, when a government nationalizes certain industries
in the public sector, whereby industrial or public monopolies are created. Certain fields
like arms and ammunition, atomic energy, railways and air transport will be the sole
monopoly of the Central Government.
Thank You !