Deadweight Loss Calculator

Your details

Choose the market intervention you want to analyse. This label is used to name the outputs and does not change the underlying triangle formula.
The free-market price before the intervention, where supply equals demand.
The free-market quantity sold before the intervention.
The buyer price after the intervention takes effect. For a tax this is above P0; for a subsidy it is below P0; for a price floor it is the floor; for a price ceiling it is the ceiling.
The quantity exchanged after the intervention. This is typically less than the equilibrium quantity for taxes and price floors, and can be more or less for subsidies depending on elasticity.
Currency
Deadweight Loss (DWL)Small welfare loss
$450.00

Area of the welfare triangle lost due to the intervention

Price change$3.00
Quantity change300
Consumer surplus change-$1,275.00
Producer surplus change-$1,275.00
Total welfare change-$2,550.00
Government revenue / cost$2,100.00
Consumer surplus change-$1,275.00
Producer surplus change-$1,275.00
Govt revenue / cost$2,100.00
Net welfare change-$2,550.00

Deadweight loss from this tax: 450.00.

  • The price changed by 3.00 (30.0%) and the quantity exchanged fell by 300 units (30.0%).
  • The DWL triangle has a base of 3.00 (price gap) and a height of 300 (quantity gap), giving an area of 0.5 x 3.00 x 300 = 450.00.
  • The government collects roughly 2100.00 in tax revenue, but total social welfare still falls by the DWL amount because the transactions that no longer happen represent pure loss.
  • Combined consumer and producer surplus change by approximately -2550.00. This is the net social welfare effect including any government revenue transfer.

Next stepTo reduce DWL, consider a narrower tax base or a Pigouvian tax equal to the external cost, where the DWL is offset by correcting a pre-existing market failure.

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