Graph 8-1
-According to Graph 8-1, the loss in total welfare resulting from the levying of the tax is represented by area:
A)A + B + C
B)C + E
C)D + E + F
D)A + B + D + F

Question

Graph 8-1 
-According to Graph 8-1, the loss in total welfare resulting from the levying of the tax is represented by area:
A)A + B + C 
B)C + E 
C)D + E + F 
D)A + B + D + F

Quizplus · Accepted Answer

The loss in total welfare (also known as deadweight loss) due to a tax is represented by the areas that are not transferred from consumers or producers to the government but are lost entirely. This includes the areas where transactions that would have occurred in the absence of the tax no longer happen. Area C represents the loss in consumer surplus, and area E represents the loss in producer surplus that is not transferred to the government but is lost to the market as a whole.

Graph 8-1 -According to Graph 8-1, the Loss in Total Welfare Resulting