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Theory
of the Consumer.
To the left is a diagram from the interactive exercise on
profit maximizing behavior for a monopolist. The Classic
Economic Models also includes profit...
Definition of Marginal Cost (MC)
Marginal Cost (MC)
The marginal cost of an additional unit of output is the cost of the
additional inputs needed to produce that output. More formally, the
marginal cost is the derivative of tota...
Definition of Deadweight Loss
Deadweight Loss
Deadweight loss is the inefficiency caused by, for example, a tax or monopoly
pricing. The diagram below shows a deadweight loss (labeled "gone") caused
by a sales tax. By causin...