Page "Deadweight loss" Paragraph 4

For example, consider a market for nails where the cost of each nail is 10 cents and the demand will decrease linearly from a high demand for free nails to zero demand for nails at $ 1. 10.

In a perfectly competitive market, producers would have to charge a price of 10 cents and every customer whose marginal benefit exceeds 10 cents would have a nail.

However if there is one producer who has a monopoly on the product, then they will charge whatever price will yield the greatest profit.

For this market, the producer would charge 60 cents and thus exclude every customer who had less than 60 cents of marginal benefit.

The deadweight loss is then the economic benefit foregone by these customers due to the monopoly pricing.