Page 1 - Lession Note - Main Mkt Forms-75
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Class-XI

                                                  Microeconomics


                                                    CHAPTER-10


                                Topic –MAIN MARKET FORMS (Module-75)

                      Sub topic :  Basic concepts , Features of perfect competition


               Short note

               Meaning  of Monopoly:
                ‘Mono’ means single and ‘poly’ means seller, i.e., single seller.
                Monopoly is a market situation where there is a single firm selling the commodity
               and there is no close substitute of the commodity sold by the monopolist.
                Reasons for the emergence of  Monopoly:
               (a) Grant of patent rights
                When a company introduces a new product or new technology it applies to the
               government to grant it patent certificate by which it gets exclusive rights to
               produce new product or use new technology.

               (b) Licensing by Government
                A monopoly market emerges when government gives a firm license, i.e.
               exclusive legal rights to produce a given product or service in a particular area or
               region.
               (c) Forming a Cartel
               A Cartel is a group of firms which jointly set output and prices so as to exercise
               monopoly power. For example, In 1960, some oil producing companies formed a
               cartel, called OPEC (Organisation of Petroleum Exporting Countries).
                Features of Monopoly:
               (a) Single Seller
                There is only one seller or producer of a commodity in the market.As a result, the
               monopoly firm has full control over the supply of the commodity.
               (b) Absence of close substitutes of product
               The product sold by the monopolist has no close substitute.

               (c) Difficult entry of a new firm
                The monopolist controls the situation in such a way that it becomes very difficult
               for a new firm to enter the monopoly market and compete with the monopolist by
               producing the same product.
               (d) Price Discrimination
               Price discrimination refers to the practice of charging different prices from
               different buyers at the same time for the same product.
               (e) Price Maker
                A monopoly firm has market power and is itself a price-maker.

               4. Shape of demand curve under monopoly:
               (a) As we know in monopoly there is a single seller or firm, that is why like an
               industry, single seller constitutes the entire market for the product, which has no
               close substitutes.
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