Figure: The Gasoline Market
(Figure: The Gasoline Market) Look at the figure The Gasoline Market.An excise tax has been levied on each gallon of gasoline, shifting the supply curve upward.The deadweight loss from
This tax is equal to:

Question

Quizplus · Accepted Answer

The deadweight loss is the triangle between the original supply curve, the new supply curve, and the demand curve. Using the formula for the area of a triangle (1/2 base times height), we can calculate the deadweight loss to be $4,375. Therefore, the correct answer is D.

Figure: the Gasoline Market