What you should know about deadweight loss
Religion & Liberty Online

What you should know about deadweight loss

Note: This is post #24 in a weekly video series on basic microeconomics.

When prices are controlled, the mutually profitable gains from free trade cannot be fully realized, creating what is known as deadweight loss. In this video by Marginal Revolution University, Alex Tabarrok shows how to calculate deadweight loss using our example of a price ceiling on gasoline.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: Why did people in the 1970s have to wait in line for gas?

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).