Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

4.0 OBJECTIVES 
 
To study the meaning and features of monopoly 
To understand the different types of monopoly 
To study the price determination under monopoly 
To study the role of time element in price determination 
To understand the concept of Economic Rent 
To study the concept of collective bargaining 
To study the relationship between price and output under
bilateral monopoly 
To study the Loanable Fund Theory 
To study the relation between Risk-bearing and profits 
To study the relation between Uncertainty-bearing and 
profit
 

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4.1 INTRODUCTION OF MONOPOLY 
 
The word 'monopoly' has been derived from the two Greek 
words 'Monos' which means 'single' and 'Polus' which means 
'seller', so the word 'monopoly' means 'a single seller'. It is an 
imperfect market and an extreme form of market situation. Thus, 
'Monopoly Market' is a market situation where there is only one 
producer of a commodity with no close substitutes for its product 
in the market. It is complete negation of competition. Absolute 
monopolies are rare, but important characteristics of monopoly 
may manifest when a single seller provides less than the whole 
supply and his share of the market is large enough to give him 
nearly complete control over the market. 
Features of Monopoly: 
1. Single seller: There exists only one seller or producer or firm of 
a commodity in the market, but there are many buyers. 
 
2. Identical with industry: The monopolist is both the firm as well 
as the industry and each firm constitutes the industry because it 
produces a separate commodity. Since the firm itself is the 
industry and has full control over supply of the commodity the 
distinction between industry and firm disappears. The monopolist, 
therefore, may be an individual, a firm or a group of firms or a 
government corporation or even the government itself