Deadweight Loss Calculator

Market Equilibrium (Before Intervention)

Equilibrium Price ($):

Equilibrium Quantity:

After Tax/Intervention

Price Paid by Consumers ($):

Price Received by Producers ($):

New Quantity Traded:

Market Parameters

Demand Curve Slope (negative):

Supply Curve Slope (positive):

Deadweight Loss Analysis

Deadweight Loss: $0.00

Tax Revenue: $0.00

Consumer Surplus Loss: $0.00

Producer Surplus Loss: $0.00

Total Welfare Loss: $0.00

Efficiency Ratio: 0%

Understanding Deadweight Loss

Deadweight Loss: The reduction in economic efficiency that occurs when the equilibrium outcome is not achieved due to market distortions like taxes, subsidies, or regulations.

Formula: DWL = ½ × (Tax per unit) × (Reduction in quantity traded)

Economic Impact: Represents lost consumer and producer surplus that is not captured by anyone - pure economic waste.

Policy Implications: Larger deadweight losses indicate greater economic inefficiency from government interventions.

Tax Incidence: The distribution of tax burden between consumers and producers depends on relative elasticities of demand and supply.