The social demand for college degrees (SD) equals the private marginal benefit curve (D) plus the external marginal benefit (EMB). The socially optimal number of college degrees, Q*, is found at point A, the intersection of the marginal cost curve S = MC_I and SD. In an unregulated market for college degrees, production occurs at point B (Q_MKT, P_MKT), where D = S = MC_I. Because the market does not take into account the external marginal benefit (EMB), it ends up producing fewer college degrees Q_MKT than the socially optimal quantity (Q*), resulting in a deadweight loss equal to the shaded triangle.