what do you mean by Dead Weight Loss?
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Deadweight loss is the fall in total surplus that results from a market distortion, such as a tax. In economics, a deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economicefficiency that can occur when equilibrium for a good or service is not achieved or is not achievable.
Deadweight Loss. The loss of economic activity due to excessive taxation. ... The deadweight loss is both the cost of keeping that person on welfare and the loss incurred from the economy at large from losing that person's production. It is also called the excess burden of taxation.
How do you find deadweight loss?
These cause deadweight loss by altering the supply and demand of a good through price manipulation. In order to calculate deadweight loss, you need to know the change in price and the change in quantity demanded. The formulato make the calculation is: Deadweight Loss = .5 * (P2 - P1) * (Q1 - Q2).
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