-The figure above shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of _______, decreases consumer surplus by _______, and decreases producer surplus by _______.

Question

Quizplus · Accepted Answer

The introduction of a sales tax in a market typically leads to a deadweight loss because it causes a decrease in the quantity of goods traded, moving the market away from the equilibrium point where supply equals demand. This results in a loss of economic efficiency. The deadweight loss is represented by the area of the triangle formed between the new quantity traded and the supply and demand curves. Additionally, consumer surplus decreases as consumers pay more for the product, and producer surplus decreases as producers receive less for their product after the tax. The specific values for the deadweight loss, decrease in consumer surplus, and decrease in producer surplus depend on the details of the tax and the market's supply and demand curves.

-The Figure Above Shows the Market for Books Before and After