Sales Tax

The following questions refer to the accompanying diagram shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.

-Refer to Sales Tax.After the tax is imposed,the deadweight loss is equal to

Question

Sales Tax

The following questions refer to the accompanying diagram shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.

-Refer to Sales Tax.After the tax is imposed,the deadweight loss is equal to

Quizplus · Accepted Answer

Deadweight loss refers to the loss in total surplus (consumer surplus plus producer surplus) that occurs when a tax is imposed, and the market is no longer in a perfectly efficient equilibrium. Area E + H represents the reduction in total surplus that neither goes to the consumers nor the producers nor is collected by the government as tax revenue, hence correctly depicting the deadweight loss.

Sales Tax the Following Questions Refer to the Accompanying Diagram Shows the Diagram