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

4.11 SUMMARY 
 
1. '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. 
2. There are several types of monopoly such as Natural monopoly, 
Legal monopoly, Pure monopoly, Imperfect monopoly, Public or 
Social monopoly, Private monopoly, Simple monopoly. 
3. In case of monopoly the average revenue Curve or the demand 
curve slopes downwards and the marginal revenue curve lies 
below it. This implies that the monopolist can sell more at a lower 
price. Besides, as the average revenue is falling, the marginal 
revenue falls faster than average revenue. 
4. The monopolist follows a trial and error method for determining 
his price and output; and finally adjusts his price and output in 
such a way that MR = MC and he derives maximum profit. 
5. Alfred Marshall introduced 3 time periods where time refers to 
the possibility of adjusting the supply according to the change in 
demand. (i) Market period (ii) Short period and (iii) Long period 
6. The rent paid by the tenant farmer to the landowner is 
economic rent. It is sometimes described as a surplus because it 
does not result from any effort or activity on the part of the 
landowner.
7. Under bilateral monopoly in the market for a final product, the 
single buyer or monopolist is a consumer. The firm which 
produces that product (which has no close substitutes) is the 
monopolist supplier or seller. Analysis of pricing and output under 
bilateral monopoly in the product market is almost the same as we 
made in case of the exchange of this two goods between two 
individuals. 
8. The Loanable Funds Theory which was developed by neo-
classical economists is a revised and improved version of the 
classical theory in which along with the real factors, monetary 
factors have also been included. 

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9.
According to Hawley, the most essential function of the 
entrepreneur is risk-taking. Bearing of risks is impossible without 
the expectation of a reward. Profits are the reward for the risks 
that the entrepreneur bears. The reward for risk-taking must be 
higher than the actuarial or the average value of the risks borne. 
10. The assumption of uncertainty, like that of waiting, is a 
disutility and must therefore be rewarded. Just as it is the function 
of the capitalist to supply waiting, so it is the peculiar function of 
the entrepreneur to bear the uncertainties of production. Profit, the 
income of the entrepreneur, is therefore the reward for 
uncertainty-bearing.