ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -This firm is the sole producer of a product, and there are no close substitutes. Because there are no alternatives, the firm has the highest level of market power. Hence, monopolists often reduce output, increase prices and earn more profit. Entry or exit is blocked in a pure monopoly.

Detailed explanation-2: -What is Monopoly. Definition: A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.

Detailed explanation-3: -A monopoly is the type of imperfect competition where a seller or producer captures the majority of the market share due to the lack of substitutes or competitors. A monopolistic competition is a type of imperfect competition where many sellers try to capture the market share by differentiating their products.

Detailed explanation-4: -An oligopoly refers to a market with only a few sellers. Monopolistic competition refers to situations where there are many sellers, but the products are highly differentiated. There are several important nuances to explore between these types of markets.

Detailed explanation-5: -A pure monopoly implies a company whose product is the only one on the market, implying it has no substitutes. Therefore, the industry is practically dominated by a single company. Consequently, these businesses can maximize profits by calculating the optimal price and quantity.