Grade Booster student workshops are back in cinemas for 2022. Learn more

Economics

Student Videos

Deadweight Loss of Economic Welfare Explained

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

The idea of a deadweight loss relates to the consequences for economic efficiency when a market is not at an equilibrium. The concept links closely to the ideas of consumer and producer surplus.

Deadweight Loss of Economic Welfare Explained

Deadweight loss is relevant to any analytical discussion of the:

Impact of indirect taxes and subsidies
Introduction of maximum and minimum prices
The economic effects of trade tariffs and quotas
Consequences of monopoly power for consumer welfare

But keep in mind:
  1. Taxes are often justified on grounds of market failure
  2. Freely functioning markets often fail to take into account the effects of externalities from production and consumption
  3. Try to analyse the effects of an intervention in terms of the likely net effect on economic and social welfare

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2022 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.