Deadweight Loss Calculator

A Deadweight Loss, also known as excess burden or allocative inefficiency, is a loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved. That can be caused by monopoly pricing in the case of artificial scarcity, an externality, a tax or subsidy, or a binding price ceiling or price floor such as a minimum wage.

Deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved.

The Deadweight Loss Calculator helps calculating Deadweight Loss, given Supply and Demand curves and Selling Price

Demand Curve: P = - Q

Supply Curve: P = + Q

P = Price Q = Quantity

Selling Price Dollars

Deadweight loss is created by:

Price floors: The government setting a limit on how low a price can be charged for a good or service. An example of a price floor would be minimum wage.

Price ceilings: The government setting a limit on how high a price can be charged for a good or service. An example of a price ceiling would be rent control – setting a maximum amount of money that a landlord can collect for rent.

Taxation: The government charging above the selling price for a good or service. An example of taxation would be cigarette tax.