Question
Explain the features of monopoly market.
The monopolist’s firm is the only firm; it is an industry. But the number of buyers is assumed to be large.
There shall not be any close substitutes for the product sold by the monopolist. The cross elasticity of demand between the product of the monopolist and others must be negligible or zero.
There are either natural or artificial restrictions on the entry of firms into the industry, even when the firm is making abnormal profits.
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| Output (Units) | 1 | 2 | 3 | 4 |
| TR(₹) | 10 | 18 | 24 | 28 |
| ₹ (in crores) | ||
| (i) | Compensation of employees | 2,500 |
| (ii) | Profit | 700 |
| (iii) | Mixed income of self-employed | 7,500 |
| (iv) | Government final consumption expenditure | 3,000 |
| (v) | Rent | 400 |
| (vi) | Interest | 350 |
| (vii) | Net factor income from abroad | 50 |
| (viii) | Net current transfers to abroad | 100 |
| (ix) | Net indirect taxes | 150 |
| (x) | Depreciation | 70 |
| (xi) | Net exports | 40 |
| | | (₹ crores) |
| (i) | Corporation tax | 100 |
| (ii) | Private final consumption expenditure | 900 |
| (iii) | Personal Income tax | 120 |
| (iv) | Government final consumption expenditure | 200 |
| (v) | Undistributed profits | 50 |
| (vi) | Change in stocks | (-)20 |
| (vii) | Net domestic fixed capital formation | 120 |
| (viii) | Net imports | 10 |
| (ix) | Net indirect tax | 150 |
| (x) | Net factor income from abroad | (-)10 |
| (xi) | Private income | 1000 |
OR
Explain the conditions of consumer's equilibrium using marginal utility analysis.OR
A consumer consumes only two goods X and Y. Explain the conditions of consumer's equilibrium using utility analysis.