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A monopoly is a market in which a single sellar sells a product which has no subst it ut e.A monopoly (from t he greek word ” mono” meaning single and
“polo” meaning t o sell). A monopoliest is a firm t hat is t he only sellers of product ( good or services) t hat has no close subst it ut e. Toot hpast e coal
and salt is under of monopoly . best example of reilways. There is t wo t ypes of monopoly.

1 PURE MONOPOLY- is t hat market sit uat ion in which t hereis absolut ely no subst it ut e of t he product and t he ent ire market is under cont rol of a
single firm.

2 MONOPOLY EXISTS- when t here is no close subst it ut e t o t he product and also when t here is a single producer and seller of t he product .

Single seller- t he ent ire market cont rol of a single firm. Product ion , dist ribut ion and selling of t he product are all cont rolled by t he same firm. There
is no compet it ion.eg t elephone, elect ricit y, post and t elegraph oil and gas were all government monopolies.

Single product - a single seller sells a product which has no subst it ut e or at least no close subst it ut e in t he market .

No difference b/w firm and indust ry-very dist inct feat ure of monopoly is t hat t he firm and t he indust ry are and t he same.

Independent decision making – ent ire market is undercont rol of a single firm can t ake decision about t he price and out put of it s product s whit hout
any worry about decision of rival of firms.

Rest rict ed ent ry- a monopoly is charat erised by rest rict ed ent ry of firm.

PRICE SELLING FOR UNREGULATED MONOPOLIES

Economist s said t hat monopoly is power if it faces a downward sloping demand curve (see supply and demand). This is in cont rast t o a price t aker
t hat faces a horizont al demand curve. A price t aker cannot choose t he price t hat t hey sell at , since if t hey set it above t he equilibrium price, t hey
will sell none, and if t hey set it below t he equilibrium price, t hey will have an infinit e number of buyers (and be making less money t han t hey could if
t hey sold at t he equilibrium price). In cont rast , a business wit h monopoly power can choose t he price t hey want t o sell at . If t hey set it higher, t hey
sell less. If t hey set it lower, t hey sell more.

In most real market s wit h claims, falling demand associat ed wit h a price increase is due part ly t o losing cust omers t o ot her sellers and part ly t o
cust omers who are no longer willing or able t o buy t he product . In a pure monopoly market , only t he lat t er effect is at work, and so, part icularly for
inflexible commodit ies such as medical care, t he drop in unit s sold as prices rise may be much less dramat ic t han one might expect .

If a monopoly can only set one price it will set it where marginal cost (MC) equals marginal revenue (MR) as seen on t he diagram on t he right . This
can be seen on a big supply and demand diagram for many crit icism of monopoly. This will be at t he quant it y Qm; and at t he price Pm. This is above
t he compet it ive price of Pc and wit h a smaller quant it y t han t he compet it ive quant it y of Qc. The offensive monopoly gains is t he shaded in area
labeled profit (not e t hat t his diagram looks only at t he case where t here is no fixed cost . If t here were a fixed cost , t he average cost curve should
be used inst ead).

As long as t he price elast icit y of demand (in absolut e value) for most cust omers is less t han one, it is very advant ageous t o increase t he price: t he
seller get s more money for less goods. Wit h an increase of t he price, t he price elast icit y t ends t o rise, and in t he opt imum ment ioned above it will
be above one for most cust omers. A formula gives t he relat ion bet ween price, marginal cost of product ion and demand elast icit y which maximizes
a monopoly profit :  (known as Lerner index). The monopolist ’s monopoly power is given by t he vert ical dist ance bet ween t he point where t he
marginal cost curve (MC) int ersect s wit h t he marginal revenue curve (MR) and t he demand curve. The longer t he vert ical dist ance, (t he more
inelast ic t he demand curve) t he bigger t he monopoly power, and t hus larger profit s.

The economy as a whole loses out when monopoly power is used in t his way, since t he ext ra profit earned by t he firm will be smaller t han t he loss
in consumer surplus. This difference is known as a deadweight loss.

Introduction to Indian Railways

Indian Railways (IR) is t he st at e-owned railway company of India. Indian Railways had, unt il very recent ly, a monopoly on t he count ry’s rail t ransport .
It is one of t he largest and busiest rail net works in t he world, t ransport ing just over six billion passengers and almost 750 million t onnes of freight
annually. IR is t he world’s largest commercial or ut ilit y employer, wit h more t han 1.6 million employees.
The railways t raverse t hrough t he lengt h and widt h of t he count ry; t he rout es cover a t ot al lengt h of 63,940 km (39,230 miles). As of 2005 IR owns
a t ot al of 216,717 wagons, 39,936 coaches and 7,339 locomot ives and runs a t ot al of 14,244 t rains daily, including about 8,002 passenger t rains.

Railways were first int roduced t o India in 1853. By 1947, t he year of India’s independence, t here were fort y-t wo rail syst ems. In 1951 t he syst ems
were nat ionalised as one unit , becoming one of t he largest net works in t he world. Indian Railways operat es bot h long dist ance and suburban rail
syst ems.

Background
The development of IR had it s root s in t he 1800s, when India was a Brit ish colony. The Brit ish East India Company and lat er, t he Brit ish colonial
government s were credit ed wit h st art ing a railway syst em in India.

The Brit ish found it difficult t o t raverse great dist ances bet ween different places in India. They felt t he need t o connect t hose places wit h t rains
t o speed up t he journey as well as t o make it more comfort able t han t ravel by road in t he great heat . They also sought a more efficient means t o
t ransfer raw mat erials like cot t on and wheat from t he hint erlands of t he count ry t o t he port s locat ed in Bombay, Madras and Calcut t a, from where
t hey would be t ransport ed t o fact ories in England. Besides, t he mid

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