What is deadweight loss in the context of economic welfare?

Deadweight loss is a concept in economics that describes the loss of economic efficiency when the equilibrium outcome in a market is not achieved. This can happen due to various reasons, such as taxes, subsidies, or price controls, which prevent the market from reaching its ideal supply and demand balance. When this occurs, there are fewer transactions than there would be in a perfectly efficient market, meaning that both consumers and producers lose out on potential benefits. For example, if a government imposes a tax on a good, it can lead to higher prices for consumers and lower profits for producers, resulting in fewer goods being sold. This reduction in trade creates a deadweight loss, which represents the total economic value that is lost because of the market distortion.