Figure 9.4.2
-Refer to Figure 9.4.2 above. Including the consumers' expected tax burden, the total change in welfare from this policy is:
A) -$6000.
B) -$5250.
C) -$4500.
D) $4500.
E) $5250.

Question

Figure 9.4.2
-Refer to Figure 9.4.2 above. Including the consumers' expected tax burden, the total change in welfare from this policy is:
A) -$6000. 
B) -$5250. 
C) -$4500. 
D) $4500. 
E) $5250.

Quizplus · Accepted Answer

The total change in welfare includes the loss in consumer and producer surplus, as well as the tax revenue generated by the policy. The correct calculation accounts for these factors, leading to a net welfare change of -$5250. This includes the deadweight loss from reduced transactions in the market due to the tax, as well as the redistribution of some consumer and producer surplus to the government in the form of tax revenue.

Figure 9.4.2 -Refer to Figure 9.4.2 Above. Including the Consumers' Expected Tax