How much of an onus is on the teacher in an undergraduate course? I am an assistant professor at an undergraduate college in India. I teach a rigorous compulsory course in microeconomics, requiring some intermediate-advanced math knowledge. There is no add/drop option at my University/college, nor is there an option to take a course in a later semester. I don't decide the syllabus or the final exam--it is set centrally. We are a publicly funded University and have a diverse set of students. 

General math preparation in my country is low, due to poor schooling standards and sometimes, students are not clear about basic concepts: for example, in a third semester intermediate microeconomics course, some of them don't know how to write the (linear) equation of a budget frontier (something taught to them in the first semester). Unless they understand such things, it is impossible for them to grasp the rest of the material, since all topics are related. Is it my responsibility to explain concepts taught in introductory-level courses? I welcome all questions and have a generally amicable attitude, so students don't feel intimidated in getting a clarification.

However, I do get frustrated sometimes when having to answer something very basic, that too repeatedly. I get glowing feedback for most of my courses, but despite being appreciated for my effort and the clarity of explanation, a group of students (around 20% of the class) repeatedly under-performs, which upsets me a lot. How much should I hold students responsible for their learning?
I do not think you can solve this problem alone. As such I would suggest collaborating with the teachers who teach the prerequisites to your courses. Knowing what is happening in colleagues classes can help you to know what the students needs our in addition to the governmental requirements.
By working together you can determine how much review and overlap should be a part of each course as students move from one course to the next.
This kind of joint cooperation is common at the k12 level where there is often a similarly centralized control curriculum that ignores the unique characteristics of students.