Which of the following concepts is another term for deadweight loss?

• A. Marginal cost
• B. Producer surplus
• C. Excess burden
• D. Consumer surplus

Answer: (C)

Verified step by step guidance

1. Understand that deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achieved, often due to taxes, subsidies, or other market distortions.
2. Recall that deadweight loss represents the reduction in total surplus (the sum of consumer and producer surplus) that occurs because mutually beneficial trades do not happen.
3. Recognize that 'excess burden' is a term used in economics to describe the same concept as deadweight loss — it is the cost to society created by market inefficiency.
4. Compare the other options: Marginal cost is the cost of producing one more unit, producer surplus is the benefit producers receive above their costs, and consumer surplus is the benefit consumers receive above what they pay; none of these are synonymous with deadweight loss.
5. Conclude that 'excess burden' is the correct alternative term for deadweight loss because both describe the loss in total welfare due to market distortions.