Changes

The overall loss to society imposed by a monopoly is thus the sum of all the individual (P-MC) for each unit withdrawn from the market.  Because P is a function of output, the P is different for each unit withdrawn from the market as the monopoly raises its price.

The overall loss to society imposed by a monopoly is thus the sum of all the individual (P-MC) for each unit withdrawn from the market.  Because P is a function of output, the P is different for each unit withdrawn from the market as the monopoly raises its price.

The social loss can be described easily in graphical form as the area under the demand curve between the points P and MC, and above a price line equal to MC.

The social loss can be described easily in graphical form as the area under the demand curve between the points P and MC, and above a price line equal to MC.  Also, the summation can be performed by using calculus.

Here is an example:

Here is an example:

'''We assume that society would have purchased the unit up until just below the higher price.''' When the price went from $5 to $6, one unit went unsold and the loss to society was very nearly (P-MC=$6-$5=$1).  Likewise, another unit went unsold at $7 (P-MC=$2), another unit went unsold at $8 and another unit went unsold at $9. That total social cost is very nearly $1 + $2 + $3 + $4 = $10.  

'''We assume that society would have purchased the unit up until just below the higher price.''' When the price went from $5 to $6, one unit went unsold and the loss to society was very nearly (P-MC=$6-$5=$1).  Likewise, another unit went unsold at $7 (P-MC=$2), another unit went unsold at $8 and another unit went unsold at $9. That total social cost is very nearly $1 + $2 + $3 + $4 = $10.  

If Anthony instead maximized his profits by selling more output, then the social loss is less.  If Anthony sold four units at $8, then the social cost is very nearly $1 + $2 + $3 = $6.  The "very nearly" is so close to the number that we drop the "almost" and simply provide the number as the estimated social cost.

If Anthony instead maximized his profits by selling more output, then the social loss is less.  If Anthony sold four units at $8, then the social cost is very nearly $1 + $2 + $3 = $6.  The "very nearly" is so close to the number that we drop the "very nearly" and simply provide the number as the estimated social cost.