Definition
- Deadweight loss
- Deadweight loss is the loss in social surplus that occurs when an economy produces at an inefficient quantity.
- Not to be confused with: Tariff
- A tariff is a tax that a government places on imported goods and services, which makes imports more expensive for consumers.
Test yourself
What is the difference between deadweight loss and tariff?
A tariff is the policy; deadweight loss is one of the welfare costs it creates.