What is deadweight loss in the context of taxation?

Deadweight loss is a concept that describes the loss of economic efficiency when a tax is imposed. When the government adds a tax, it can change how people buy and sell goods, leading to fewer transactions than would happen without the tax. This means that some buyers may not purchase a product because it's now too expensive, and some sellers may not want to sell it because they don't earn enough after the tax. For example, if a tax is placed on soda, fewer people might buy soda, and some soda producers might decide it's not worth making as much soda, resulting in a loss of sales and profit for both sides. Overall, deadweight loss shows how taxes can create a gap in the market where both consumers and producers lose out on potential benefits.