Use the following information to answer the next questions.
The following graph depicts a market where a tax has been imposed. P e was the equilibrium price before the tax was imposed, and Q e was the equilibrium quantity. After the tax, P C is the price that consumers pay, and P S is the price that producers receive. Q T units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve S T . Include both sections of those rectangles when choosing your answers.

-Which areas represent consumer surplus before the tax is imposed?

Question

Use the following information to answer the next questions.
The following graph depicts a market where a tax has been imposed. P e was the equilibrium price before the tax was imposed, and Q e was the equilibrium quantity. After the tax, P C is the price that consumers pay, and P S is the price that producers receive. Q T units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve S T . Include both sections of those rectangles when choosing your answers.
 
-Which areas represent consumer surplus before the tax is imposed?

Quizplus · Accepted Answer

Consumer surplus before the tax is imposed is the difference between the price consumers are willing to pay for a good and the price they actually pay. In this case, the price consumers are willing to pay is represented by the demand curve, and the price they actually pay is represented by the supply curve. The area above the supply curve and below the demand curve represents the consumer surplus. This area is labeled A.

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