Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, producer surplus will fall from:
A) 2,500 to 1,600.
B) 5,000 to 3,200.
C) 3,200 to 1,600.
D) 5,000 to 2,500.

Question

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, producer surplus will fall from: 
A) 2,500 to 1,600. 
B) 5,000 to 3,200. 
C) 3,200 to 1,600. 
D) 5,000 to 2,500.

Quizplus · Accepted Answer

The Answer of Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, producer surplus will fall from: 
A) 2,500 to 1,600. 
B) 5,000 to 3,200. 
C) 3,200 to 1,600. 
D) 5,000 to 2,500.

Refer to the Graph Shown