Figure 8-3

-Refer to Figure 8-3.The amount of deadweight loss as a result of the tax is
A)$210.
B)$420.
C)$560.
D)$980.

Question

Figure 8-3
 
-Refer to Figure 8-3.The amount of deadweight loss as a result of the tax is
A)$210. 
B)$420. 
C)$560. 
D)$980.

Quizplus · Accepted Answer

The deadweight loss is the triangle formed by the demand curve, the supply curve, and the tax line. The base of the triangle is the quantity of goods that would be sold without the tax, and the height of the triangle is the difference between the price with the tax and the price without the tax. In this case, the base of the triangle is 20 units, and the height of the triangle is $10. Therefore, the area of the triangle, which represents the deadweight loss, is $100.

Figure 8-3 -Refer to Figure 8-3.The Amount of Deadweight Loss as a Deadweight