Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

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Deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. In the context of tariffs or quotas, it measures the decrease in total surplus (the sum of consumer and producer surplus) because these trade barriers distort market equilibrium, leading to less trade and higher prices, which in turn reduces the overall welfare or total surplus in the economy.

Deadweight Loss Measures the Decrease in Total Surplus That Results