In economics, 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 service is not Pareto optimal. In other words, either people who would have more marginal benefit than marginal cost are not buying the product, or people who have more marginal cost than marginal benefit are buying the product.
Causes of deadweight loss can include monopoly pricing (in the case of artificial scarcity), externalities, taxes or subsidies, and binding price ceilings or floors (including minimum wages). The term deadweight loss may also be referred to as the "excess burden" of monopoly or taxation.
Read more about Deadweight Loss: Examples, Hicks Vs. Marshall
Famous quotes containing the word loss:
“Mothers risk alienating their mates if they expect them to hold or care for the baby exactly as they do. Fathers who are constantly criticized or corrected may lose interest in handling the baby, and this is a loss for everyone. The cycle is a dangerous one. Now the same mother feels bitter because she is no longer getting any help at home.”
—Cathy Rindner Tempelsman (20th century)