Deadweight loss, also known as excess burden, is a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced.

What are efficiency losses?

Deadweight loss, also known as excess burden, is a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced.

What is deadweight loss formula?

Deadweight loss is defined as the loss to society that is caused by price controls and taxes. … In order to calculate deadweight loss, you need to know the change in price and the change in quantity demanded. The formula to make the calculation is: Deadweight Loss = . 5 * (P2 – P1) * (Q1 – Q2).