On the top of the hill lives a hermit. Please explain as well.
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On the top of the hill lives a hermit.
Here the subject of the sentence (clause) is a hermit.
The example sentence can also be written as:
A hermit lives on the top of the hill.
Tipically, in a sentence (clause), everything that comes after the subject or everything that is not the subject is the predicate. Consequently, the predicate in your sentence is lives on the top of the hill.