Indian Railways, or IR, is the state-owned railway company of India. It operates under the Ministry of Railways within the Government of India and is responsible for most rail transportation in the country. With a vast network, Indian Railways handles more than 18 million passengers and 2 million tonnes of freight each day. Moreover, it holds the notable distinction of being the largest employer globally in commercial or utility sectors, with a workforce exceeding 1.4 million individuals.
India’s railway network is extensive and impressive, with a total route length of over 63,327 kilometers (39,350 mi) and 6,909 stations. The rolling stock includes more than 200,000 (freight) wagons, 50,000 coaches, and 8,000 locomotives. The history of railways in India dates back to 1853 when the first rail system was introduced. By the time India gained independence in 1947, there were forty-two separate rail systems operating. However, these systems were nationalized and merged into one unit in 1951 to create Indian Railways (IR), which is now one of the largest railway networks worldwide.
Indian Railways operates on a multi-gauge network that includes broad gauge, meter gauge, and narrow gauge tracks. They also have facilities for locomotive and coach production.
Indian Railways, under the control of the Ministry of Railways, is a government department in India. Mamtha Benerjee currently serves as the Union Minister for Railways. The Railway Board, also known as the Ministry of Railways, acts as the top management organization for Indian Railways. It is led by a Chairman who reports to the Minister of Railways and collaborates with five other members. Additionally, the board receives reports from General Managers of zonal railways and production units.
Railway Zones [pic] A Schematic map of the Indian Railways network showing various zones. [pic] The headquarters of the Indian Railways in New Delhi
Indian Railways is divided into zones, which are further sub-divided into divisions. The number of zones in Indian Railways increased from six to eight in 1951, nine in 1952, and finally 16 in 2003. Each zonal railway consists of a specific number of divisions, each having its own divisional headquarters. In total, there are sixty-seven divisions. Despite being owned and operated by Indian Railways, the Kolkata Metro does not fall under any of the zones.
Each of the sixteen zones, including Kolkata Metro, is classified as a zonal railway and operates under separate management. The General Manager (GM) serves as the head of each zone and reports directly to the Railway Board. Divisions within each zone are supervised by Divisional Railway Managers (DRM), who are accountable for maintaining and managing various assets. The divisional officers in engineering, mechanical, electrical, signal & telecommunication, accounts, personnel, operating, commercial, and safety branches report to their respective Divisional Manager.
Further down the hierarchy tree are the Station Masters who control individual stations and the train movement through the track territory under their stations’ administration. Below is a list of railway zones, their abbreviations, headquarters, and establishment dates:
1. Northern Railway (NR) – Delhi – April 14, 1952
2. Northeastern Railway (NER) – Gorakhpur – 1952
3. Northeast-Frontier Railway (NFR) – Maligaon (Guwahati) – 1958
4. Eastern Railway (ER) – Kolkata – April, 1952
5. South-Eastern Railway (SER) – Kolkata – 1955
6. South-Central Railways (SCR) – Secunderabad – October 2, 1966
7. Southern Railway (SR) – Chennai – April 14, 1951
8. Central Railway (CR) – Mumbai – November 5, 1951
9.Western Railway(WR)-Mumbai-November 5th , 2003
10.South-Western Raiway(SWR)-Hubli-April 01st ,2003
11.North-Western Rialway(NWR)-Jaipur-Octuber-01st ,2002
12.West Central Raiway(WCR)-Jabalpur-April-01st ,2003
13.East Coast(ECoR)-Bhubaneswar-April-01st ,2003
14.North Central(NCR)-Allhabad-April-01st ,2003
15.South East Central(SECR)-Bilaspur(cg.)April-01st ,2003
16.East Cental(ECR)-Hajipur-Octuber-01,st-,2020
Recruitment and Training: Indian Railways is the largest civilian employer in the world, with approximately 1.2 million employees. The line and staff management organization is comprised of 1200 officers. The Union Public Service Commission (UPSC) conducts the Indian Engineering Services examination to recruit Officers for Group ‘A’ service.The Railway Recruitment Control Board (RRCB) is responsible for overseeing the recruitment process of Group ‘C’ and ‘D’ employees on the Indian Railways. This process is conducted by 19 Railway Recruitment Boards (RRBs). Additionally, candidates have the option to choose the Special Class Railway Apprentices (S.C.R.A.) program as a career path, which is supervised by the UPSC.
The training of all cadres is distributed among six centralized training institutes. Indian Railways relies on its six manufacturing plants, known as Production Units, to produce a significant portion of its rolling stock and heavy engineering components. These Production Units are directly managed by the ministry. This approach was adopted due to the immature state of the national engineering industry and the policy to substitute expensive technology-related products with locally manufactured ones, which is common in developing economies. The General Manager of each production unit reports directly to the Railway Board.
The Railway Board controls independent organizations for electrification, modernization, and research and design, each led by a General Manager. The Ministry of railways also administratively oversees several Public Sector Undertakings that perform various railway-related functions, including consultancy and ticketing. Furthermore, the most commonly used gauge by the Indian railway is Broad gauge.
The Indian Railways uses approximately 108,805 km (67,608 mi) of track, with a total network route length of 63,465 km (39,435 mi).
About 28% of the route-kilometer and 40% of the total track kilometer is electrified. The track sections have speed ratings ranging from 75 to 160 km/h (47 to 99 mph). The Indian railways utilize four gauges: broad gauge (wider than the standard gauge of 1,435 mm), meter gauge, and two narrow gauges (762 mm and 610 mm). The most widely used gauge in India is the broad gauge, which spans 1,676 mm and has a track length of 89,771 km. In some regions with lower traffic, the meter gauge (1,000 mm) is commonly used, but there is an ongoing Uni-gauge project to convert all tracks to broad gauge. Narrow gauges are found on a few routes in hilly terrains and former private railways due to cost considerations. The narrow gauges cover a total distance of 3,350 km. Notable narrow gauge hill lines include the Kalka-Shimla Railway, Nilgiri Mountain Railway, and Darjeeling Himalayan Railway. Most places use prestressed concrete, steel, or cast iron posts for sleepers (ties), although teak sleepers are still used on some older lines.
The prestressed concrete sleeper, which is based on RDSO Drawing No. RDSO-T-2496 and widely used, was created as a substitute for metal sleepers. Indian Railways categorizes the country into four zones based on track temperature range. Among these zones, Rajasthan experiences the most extreme temperature fluctuations with variations of over 70°C (158°F) possible. Additionally, Indian Railways operates approximately 9,000 passenger trains every day and carries around 18 million passengers across twenty-eight states and one union territory.
In India, the states of Sikkim, Arunachal Pradesh, and Meghalaya are the only ones without rail connectivity. The majority of long distance travel in the country is carried out by passenger trains. A standard passenger train usually consists of eighteen coaches, although popular trains can have up to 24 coaches. Each coach has capacity for between 18 and 81 passengers, but during peak times or on busy routes, additional passengers may be accommodated. Most regular trains have vestibules connecting the coaches together, except for the ‘unreserved coaches’ which lack this connection.
Reservation against cancellation (RAC) is a service that allows wait-listed passengers to be accommodated in shared berths if their travel tickets are not confirmed. This helps maximize the number of passengers who can be accommodated in case of cancellations.
Interstate trains offer two to three classes of travel, including First and Second class. These classes have different pricing systems and varying amenities. First class can refer to a separate cabin or a higher-priced option. Second class can have two or three tiers, with higher prices for the former, or it can be a seat-only class popular on shorter routes.
Many interstate trains provide amenities such as air conditioning, padded leather seats or berths, sheets, pillows, blankets, and meals and refreshments. The availability of these amenities depends on the popularity and length of the route.
The lavatories on these trains are communal and offer both Indian-style holes in the ground and Western-style commodes.
The table below shows the classes currently available on these trains.
Not all classes may be connected to a rake, but here is a description of each class:
1A: The First class AC is the most expensive class, comparable to airlines. It includes bedding and is only available on popular routes between metropolitan cities. This class can accommodate 18 passengers and offers carpeted coaches with sleeping accommodations and personal coupes.
2A: AC-Two tier is an air-conditioned class with sleeping berths, ample leg room, curtains, and individual reading lamps. Berths are arranged in two tiers in bays of six, with a gangway in between. Bedding is provided. Each broad gauge coach can carry 48 passengers.
FC: First class is similar to 1AC but without air conditioning. This class is not very common.
3A: AC three tier is an air-conditioned class with sleeping berths. Berths are arranged with three tiers across the width and two long ways, creating eight bays of eight berths total. This class is slightly less well-appointed, typically lacking reading lights and curtained-off gangways. Bedding is included, and each coach can carry 64 passengers in broad gauge.
CC: AC chair car is an air-conditioned seater coach with a total of five seats in a row. It is used for day travel between cities.Executive class chair car (EC) is an air-conditioned seater coach with four seats in a row, typically used for day travel between cities. On the other hand, Sleeper class (SL) is the most common coach, usually with up to ten coaches attached. These regular sleeping coaches have three vertically stacked berths. In broad gauge, each coach accommodates 72 passengers. However, railways have made modifications to certain Sleeper Coaches on popular trains to accommodate 81 passengers instead of the regular 72.
This was done in order to facilitate benefits like clearing the passenger rush and simultaneously earning more revenue. However, this has received a lukewarm response with criticism from the travelers, and railways have decided to remove them.
2S Seater class: same as AC Chair car, but without the air-conditioning.
G or UR General or Unreserved: The cheapest accommodation, with seats made of pressed wood and rarely cushioned. Although entry into the compartment is guaranteed, a sitting seat is not guaranteed.
Tickets issued are valid on any train on the same route within 24 hours of purchasing the ticket. These coaches are typically crowded. The train has a special compartment called the guard’s cabin at the rear, equipped with a transceiver. This is where the guard usually signals the all clear before departure. A standard passenger rake usually consists of four general compartments, two at the front and two at the rear, with one exclusively for ladies. The exact number of compartments varies depending on the demand and route. There may also be a luggage compartment at either end.
In certain trains, there is a separate mail compartment. Long-distance trains typically have a pantry car located in the center. Notable trains and accomplishments include two UNESCO World Heritage Sites on IR: the Chatrapati Shivaji Terminus and the Mountain railways of India. The Mountain railways of India actually consist of three separate railway lines situated in different regions of the country. These include the Darjeeling Himalayan Railway, a narrow gauge railway in West Bengal, and the Nilgiri Mountain Railway, a meter gauge railway in the Nilgiri Hills in Tamil Nadu.
The Kalka-Shimla Railway is a narrow gauge railway in the Shivalik mountains in Himachal Pradesh. The Palace on Wheels, which is often pulled by a steam locomotive, is a specially designed train to promote tourism in Rajasthan. Inspired by its success, the Maharashtra government introduced the Deccan Odyssey, which covers several tourist destinations in Maharashtra and Goa. Similarly, the Government of Karnataka introduced the Golden Chariot train, connecting popular tourist spots in Karnataka and Goa. However, both the Deccan Odyssey and the Golden Chariot have not achieved the same level of popularity as the Palace on Wheels.
The Samjhauta Express, a train that travels between India and Pakistan, was temporarily shut down in 2001 due to tensions between the two nations. However, it was reopened in 2004 when the situation improved. Similarly, the Thar Express, which connects Khokhrapar (Pakistan) and Munabao (India), also resumed operations on February 18, 2006 after being closed following the Indo-Pak war in 1965. Until recently, the Kalka Shimla Railway held a record in the Guinness Book of World Records for having the highest elevation gain over a distance of 96 kilometres.
The Lifeline Express, also called the “Hospital-on-Wheels,” delivers healthcare to rural areas. It consists of four carriages: one functions as an operating room, another serves as a storeroom, and two more are used as patient wards. The train moves around the country and stays in each location for approximately two months before relocating. The Fairy Queen is another notable locomotive, currently the oldest operating train worldwide. However, it is only used for special trips between Delhi and Alwar.
John Bull, which operated in 1981 to commemorate its 150th anniversary, is a locomotive older than Fairy Queen. The Kharagpur railway station holds the record for being the world’s longest railway platform, measuring at 1072 m (3,517 ft). Along the Darjeeling Toy Train route, the Ghum station is the second highest railway station in the world that can be reached by a steam locomotive. The Mumbai–Pune Deccan Queen boasts of having the oldest running dining car in the Indian Railways network. Running from Kanyakumari to Jammu Tawi, the Himsagar Express holds the record for the longest run in terms of distance and time on the Indian Railways network.
The Bhopal Shatabdi Express, currently the fastest train in India, covers a distance of 3,745 km (2,327 miles) in about 74 hours and 55 minutes. On the Faridabad–Agra section, it can reach speeds up to 150 km/h (93.7 mph). During test runs in 2000, a train even reached a record-breaking speed of 184 km/h (114 mph). The Rajdhani Express and Shatabdi Express are both superfast trains that offer an exceptional experience with full air-conditioning. In July 2009, Mamata Banerjee, the railway minister at the time, introduced Duronto as a new non-stop train service. You can find fares and ticketing information for all these trains.
The Indian Railways provide affordable fares worldwide, regardless of the service category. Despite a recessionary economy, there have been no fare hikes in any class. In fact, some categories have even seen slight reductions in fares. Convenient ticketing services are available at major and minor railway stations across India. Furthermore, in 2003, the Indian Railways introduced online ticketing services through the IRCTC website. Passengers can choose between booking E-tickets or I-tickets, with the latter being traditional printed tickets ordered online and delivered by post.
Tourism IRCTC manages the tourism operations of the Indian Railways, including luxury trains like Palace on Wheels, Golden Chariot, Royal Orient Express, and Deccan Odyssey, which are popular among foreign tourists. Additionally, there are numerous packages for domestic tourists that cover significant tourist and pilgrimage destinations across India. Freight IR handles a wide range of goods, including mineral ores, fertilizers, petrochemicals, agricultural produce, iron & steel, multimodal traffic, and more.
Ports and major urban areas have their own dedicated freight lines and yards. Many significant freight stops have separate platforms and independent lines. Indian Railways generates 70% of its revenues and the majority of its profits from the freight sector, using these profits to subsidize the passenger sector, which is currently experiencing losses. However, the competition from trucks, which provide more affordable rates, has caused a decline in freight traffic in recent years. Indian Railways has also transitioned from handling small consignments to facilitating larger container movement since the 1990s, resulting in improved operational efficiency.
Most of its revenue from freight comes from rakes that carry bulk goods such as coal, cement, food grains, and iron ore. Indian Railways also transports vehicles over long distances, which helps save fuel expenses for trucking companies by hauling back trucks that carry goods to a specific location. Additionally, refrigerated vans are available in many areas, including the special “Green Van” used for transporting fresh food and vegetables. Indian Railways has recently introduced the high-priority freight service called ‘Container Rajdhani’ or CONRAJ.
Efforts have been made to enhance the profitability of freight transportation, which includes implementing a privatization scheme and increasing load capacities for freight wagons. When transporting a load of 4,700 metric tonnes, a freight train can reach a maximum speed of 100 kilometers per hour (62 mph). As part of these endeavors, companies are now allowed to run their own container trains within the railway system. Additionally, there has been recent authorization for a segment of an 11,000-kilometer (6,800 mi) freight corridor that links major cities in India.
The rise in manufacturing transport in India, caused by the increase in fuel costs, has led to rail transport becoming a more financially advantageous option. Measures like faster turnaround times have resulted in a 24% increase in freight revenues. To further enhance freight transportation, the Ministry of Railways plans to construct a new Dedicated Freight Corridor (DFC) that will cover approximately 2762 route km across two corridors. These corridors consist of the Eastern Corridor, which runs from Ludhiana to Sone Nagar, and the Western Corridor, stretching from Jawahar Lal Nehru Port Mumbai to Tughlakabad/Dadri. The Khurja junction will serve as the connection point between these two corridors.
Focus areas for the project include upgrading of transportation technology, increasing productivity, and reducing unit transportation cost. The “Dedicated Freight Corridor Corporation of India Limited (DFCC)” is a special purpose vehicle responsible for planning and development, mobilization of financial resources, and construction, maintenance, and operation of the Dedicated Freight Corridors. DFCC was registered as a company under the Companies Act 1956 on October 30, 2006. Rail budget and Finances
The Railway Budget is centered around the planned spending for railway infrastructure, as well as the revenue and expenses for future fiscal years. This encompasses enhancements to current trains and routes, investments in new and existing infrastructure, and establishing tariffs for freight and passenger travel. The budget is subject to discussion and examination by Parliament, which assesses the suggested policies and allocations outlined within it. Approval of the budget requires a simple majority vote in the Lok Sabha (Lower House).
While the Rajya Sabha’s comments are not binding, Indian Railways is still subject to the same audit control as other government revenue and expenditures. The determination of resources for railway expenses, both capital and revenue, is based on projected traffic and tariffs. Although railways fully covers its revenue expenditure, it relies on borrowings from the Indian Railway Finance Corporation and Budgetary support from the Central Government to partially fund its capital (plan) expenditure.
Indian Railways pays a dividend to the Central Government for the capital invested by them. According to the Separation Convention of 1924, based on the suggestions of the Acworth Committee, the Railway Budget is presented to the Parliament by the Union Railway Minister about two days before the General Budget, typically around 26 February. Despite being presented separately, the Railway Budget’s figures for revenue and expenses are also included in the General Budget, as they are integral components of the overall financials of the Government of India.
This document functions as both a balance sheet of the Railways’ previous year’s operations and a listing of expansion plans for the current year. The Railway Board, which consists of the Chairman, Financial Commissioner, and other members from Traffic, Engineering, Mechanical, Electrical, and Staff departments, is responsible for policy formation and overall control of the railways. After operating at a loss for some time, Indian Railways has successfully generated positive cash flows in recent years and has met its dividend obligations to the government.
The cash surplus of the railway has increased from INR 9000 cr in 2005 to INR 25,000 cr for the fiscal year 2007-2008. In 2006, the cash surplus was INR 14000 cr and in 2007 it was INR 20,000 cr. The operating ratio has improved to 76%. Over the past four years, the plan size has grown from INR 13,000 cr to INR 30,000 cr. The proposed investment for the fiscal year 2008-2009 is INR 37,500 cr which represents a 21% increase compared to the previous year. The Budget Estimates-2008 for Freight is set at INR52,700cr , Passenger is set atINR21,681cr , Sundry other Earnings is set atINR5,000cr ,and other Coaching Earnings are set atINR2,420cr respectively.
Projected Gross Traffic Earnings for 2009-10 are INR 93,159 crore (19.1 billion USD), growing at a double digit rate and surpassing the revised estimates for the current fiscal by INR 10,766 crore. Approximately 20% of the passenger revenue comes from the upper class segments (air-conditioned classes) of the passenger segment. Railway Minister Mamata Banerjee presented the Railway Budget 2009-2010 on 3 July 2009, which incorporated numerous upgrades and addressed current issues.
Despite the decrease in frequency, train accidents including derailments and collisions still occur, with a particular prevalence in crowded areas. The Indian Railways have acknowledged that completely eliminating accidents is an unattainable objective due to the magnitude of their operations. Instead, their focus lies in minimizing the rate of accidents. The leading cause of these incidents is human error, accounting for 83% of train accidents in India. Additionally, the Konkan Railway route has historically faced fatal accidents caused by landslides during the monsoon season.
The system is undergoing updates in outdated communication, safety, and signaling equipment. These updates in technology are necessary due to previous accidents caused by a manual signaling system between stations. As train speeds and lengths increase over time, the risk of accidents also becomes more hazardous. Therefore, automated signaling is being prioritized, despite the significant expense involved.
The latest instances of signaling control in interlinked stations involve failure-detection circuits for each track circuit and signal circuit. These circuits notify the signal control centres of any problems. Currently, this feature is only available in a small subset of the overall IR system, but there are plans to extend anti-collision devices to the entire system. Regular maintenance and upgrading are required for aging colonial-era bridges and century-old tracks. In recent years, Indian Railways has become profitable again, with operating profits increasing significantly (unaudited).
The Sixth Pay Commission has been established in India to evaluate the salary system of government employees and its suggestions are anticipated to be released by the end of 2008. According to the recommendations, it is expected that the salaries of all Railways officers and staff will be revised retroactively from January 1, 2006. If we consider the previous Pay Commissions as a reference, this revision could potentially be around 50%, which will affect the current and future budgets of the Railway sector.
The Rajdhani Express and Shatabadi Express, although the fastest trains in Indian Railways with a top speed of 150 kilometres per hour (93 mph), are facing competition from low-cost airlines. To implement high-speed bullet trains in India, France is providing expert support for at least five routes. It is estimated that over US$200 billion will be needed to modernize Indian Rail and bring it up to global standards by making new investments and upgrades.
Indian Railways (IR) is presently enhancing stations, coaches, tracks, services, safety measures, and security. They are also focusing on streamlining their software management systems like crew scheduling, freight management, and passenger ticketing. For better efficiency, crew members will soon be able to log in through biometric scanners at kiosks. Furthermore, passengers will have the choice to book tickets online. The initial phase of the upgrade will encompass work at more than five hundred stations with certain tasks being outsourced to private contractors.
All metre gauge lines in India will be converted to broad gauge through Project Unigauge. Premier Rajdhani and Shatabdi trains such as Howrah Rajdhani, Sealdah Rajdhani, Mumbai Rajdhani, August Kranti Rajdhani, Patna Rajdhani, Guwahati Rajdhani, and Bhubaneswar Rajdhani now have new LHB (Alstom) stainless steel coaches manufactured in India. These coaches not only enhance passenger safety and comfort but also have increased carrying capacity. Eventually, these coaches will replace numerous old model coaches across the entire Indian Railways network.
Polyurethane paint is being used to improve rakes’ quality and lower repainting costs. Additionally, ventilation and illumination are being enhanced, and air brake systems are being installed on all coaches. Manufacturing units are also being established to produce advanced locomotives and coaches. Furthermore, IR is expanding its telemedicine network to provide specialized medicine access to employees in remote areas.
IR has implemented various measures to improve the system. For instance, they have introduced Internet connectivity on the Mumbai-Ahmedabad Shatabdi Express in collaboration with Techno Sat Communications. Additionally, IIT Kanpur has developed eco-friendly and discharge-free toilets for trains and stations, which are aimed at promoting sustainability. IR is also using updated eco-friendly refrigerant in their AC systems and plans to install fire detection systems on trains gradually. Furthermore, new rodent-control and cleanliness procedures are being implemented across different zones of IR.
Central Railway’s ‘Operation Saturday’ is gradually making progress in the cleanup of its Mumbai division. The number of coaches on each train was increased from 16 to 24, resulting in a 28% increase in costs but a 78% increase in revenues. The railways were given permission to carry 68 tons per wagon, cutting costs compared to the previous limit of 54 tons per wagon. Additionally, the turnaround time for freight wagons was reduced from 7 days to 5 by operating the goods shed 24-7 and electrifying every feeder line, eliminating the need to switch the engine from diesel to electric or vice versa.
By reducing the turnaround time, the Railways increased their daily train load from 550 trains to 800 trains. Additionally, they decreased the minimum tonnage requirements, allowing companies to unload their cargo at multiple stops. In economics, a monopoly is a market situation in which only one provider offers a product or service. Monopolies lack economic competition and viable substitute goods.
Monopoly can be differentiated from monopoly by the presence of only one buyer for the product or service. It should also be strictly distinguished from the similar concept of a cartel. A monopoly refers to a situation where a single company is the exclusive provider of a product or service, whereas a cartel involves the establishment of a central entity to partially coordinate the actions of multiple independent providers (a type of oligopoly). The main characteristics of a monopoly are that it involves a single seller.
A pure monopoly refers to an industry where only one firm acts as the exclusive producer of a product or provider of a service. Typically, this occurs due to barriers that hinder other entities from entering the market. These barriers can arise from factors such as the unavailability of close substitutes for the product or service, making it irreplaceable beyond mere brand identity (for instance, a monopoly on a particular spring’s water sold under a specific brand does not qualify as a true monopoly). Additionally, monopolies have the ability to determine prices for their product or service, thus becoming price makers.
In a pure monopoly, a single firm has complete control over the entire industry’s supply and can manipulate prices by adjusting the quantity supplied. An example of this is the situation with Viagra before competing drugs entered the market. In subtotal monopolies such as diamonds or petroleum currently, a single organization controls a significant portion of the supply. Even if this organization limits the quantity or increases prices, other suppliers cannot compensate and gain significant market share. • Blocked Entry
The pure monopolist has no competitors due to various barriers that prevent new entrants in the market. These barriers can be economic, technological, legal (such as copyrights and patents), violent (forcing competing businesses to shut down) or any other type of barrier that completely blocks other firms from entering the market. When it comes to unregulated monopolies, the company is deemed to have monopoly power if it encounters a downward sloping demand curve (refer to supply and demand).
A business with monopoly power can choose the price they want to sell at, unlike a price taker facing a horizontal demand curve. However, they must be cautious because setting the price above the equilibrium point will result in no sales. On the other hand, setting the price below the equilibrium point will attract an unlimited number of buyers but lead to lower earnings compared to selling at the equilibrium price.
If they decrease the price, they will have higher sales. In most real markets with competition, a decrease in demand because of a price increase can be attributed to both losing customers to other sellers and customers who are unable or unwilling to buy the product anymore. In a market with pure monopoly, only the latter factor affects the market, which means that for products like medical care that are inflexible in nature, the decrease in units sold when prices rise may not be as drastic as one would anticipate.
If a monopoly is only able to establish one price, it will set that price at the point where marginal cost (MC) is equal to marginal revenue (MR), as observed on
