FIGURE 18- 3
-Refer to Figure 18- 3. Suppose that supply is perfectly elastic and the price of this good is initially
P1. If an excise tax raises the price from P1 to P2, the excess burden of the tax is area

Question

Quizplus · Accepted Answer

The excess burden of a tax, also known as the deadweight loss, is represented by the area of the triangle that forms between the supply and demand curves due to the tax. In this case, with a perfectly elastic supply, the excess burden is the area BFC.

FIGURE 18- 3 -Refer to Figure 18- 3. Suppose That Supply Is Perfectly