The following figure shows the supply and demand curves in a competitive market for a good. The government is considering a $1.50 tax on this good.

-Refer to the above figure.If the $1.50 tax is collected from the producers of this good,the consumer surplus will be ________.

Question

The following figure shows the supply and demand curves in a competitive market for a good. The government is considering a $1.50 tax on this good.
 
-Refer to the above figure.If the $1.50 tax is collected from the producers of this good,the consumer surplus will be ________.

Quizplus · Accepted Answer

When a tax is collected from producers, the supply curve shifts upwards by the amount of the tax. This results in a higher equilibrium price for consumers and a lower equilibrium quantity. The consumer surplus is the area above the price level and below the demand curve up to the quantity sold. Without seeing the specific figure, the general principle is that the consumer surplus decreases as the price increases due to the tax. The correct answer, therefore, depends on the specific details of the demand and supply curves in the figure, but given the options and assuming the tax impacts the equilibrium as described, the new consumer surplus would be calculated based on the new equilibrium. Since I can't see the figure, I can't calculate the exact change, but the principle is that the consumer surplus decreases due to the tax.

The Following Figure Shows the Supply and Demand Curves in a Competitive