Panel (a) of Figure 6.6 "Using Marginal Benefit and Marginal Cost Curves to Determine Net Benefit" shows marginal benefit and marginal cost curves for studying economics, this time without numbers We have the usual downward-sloping marginal benefit curve and upward-sloping marginal cost curve The marginal decision rule tells us to choose D hours studying economics, the quantity at which marginal benefit equals marginal cost at point C We know that the total benefit of study equals the area under the marginal benefit curve over the range from A to D hours of study, the area ABCD Total cost equals the area under the marginal cost curve over the same range, or ACD The difference between total benefit and total cost equals the area between marginal benefit and marginal cost between A and D hours of study; it is the green-shaded triangle ABC This difference is the net benefit of time spent studying economics Panel (b) of Figure 6.6 "Using Marginal Benefit and Marginal Cost Curves to Determine Net Benefit"introduces another important concept If an activity is carried out at a level less than the efficient level, then net benefits are forgone The loss in net benefits resulting from a failure to carry out an activity at the efficient level is called a deadweight loss Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 306