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27. Deadweight Loss and The Efficiency Criterion

This video demonstrates the concept of deadweight loss as an application of the efficiency criterion. I consider two cases: a per-unit tax, and a per-unit subsidy. Why does a per-unit tax create deadweight loss, and how do I identify it on a supply and demand graph? Why does a per-unit subsidy create DWL even though it is a "negative tax"? This video answers these questions using the efficiency criterion. *Pareto efficiency is a different concept than the one employed in this video, but it is related. I may address this relationship in a future video. For a list of videos and links to these videos (organized by topic), check out the Intromediate Microeconomics video web page: http://blog.thisyoungeconomist.com/p/learn-microeconomics.html
Length: 09:03

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