Deadweight loss occurs when the government imposes a tax on consumers, or businesses thus shifting the supply curve to the left and therefor reducing output, raising prices, and incurring a loss. As the graph above shows both consumers, and producers lose out when a tax is imposed, or monopoly pricing chooses to increase cost. A result of deadweight loss is decreased allocative, and productive efficiency. Overall it’s very bad to have deadweight loss, and it should be avoided at all cost.