The amount of deadweight loss after the government imposes the excise tax on the market is ½ the Price Difference multiplied by Quantity Difference.
Deadweight loss is a term that is used to refer to the economic loss that occur as a result of inefficient market condition. It usually happens when demand and supply are out of equilibrium.
In simple words, deadweight loss points it out whether the economic welfare of society is at its optimum level or not.
Some of the major reasons that leads to deadweight losses include rent control (price ceiling), minimum wage (price floor) and tax like excise duty.
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