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Why is there a Deadweight Loss if the government provides a subsidy to the producers?

Why is there a Deadweight Loss if the government provides a subsidy to the producers?

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Answer #1

The deadweight loss due to a subsidy is a economic inefficiency.Because it will shrinks the customer and producer surplus that is, and as a result of the deadweight loss the subsidy will effect more than the socially leading amount of the good which is produced . And it also effects or causes what is produced is sold at a very low price.

The peolpe have to accept the deadweight loss beacuse of subsidies provided by the government that the market would otherwise fail to fix out. So, deadweight loss is an economic inefficiency if the government provide a subsidy to the producers.

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