 For example, if in the same nail market the government provided a $0.03 subsidy for every nail produced, the subsidy would reduce the market price of each nail to $0.07, even though production actually still costs $0.10 per nail.Consumers with a marginal benefit of between $0.07 and $0.10 per nail would then buy nails, even though their benefit is less than the real production cost of $0.10.The difference between the cost of production and the purchase price then creates the "deadweight loss" to society.