How is the welfare cost of monopoly measured?

The welfare cost of monopoly is measured by analyzing the deadweight loss it creates, which represents the loss in consumer and producer surplus due to reduced output and higher prices compared to a competitive market. This deadweight loss arises because the monopolist restricts production to maximize profits, leading to a decrease in total welfare. Economists often calculate this cost by assessing the difference between the total surplus in a competitive market and that in a monopolistic market, highlighting the inefficiencies caused by monopolistic pricing and output decisions.