Figure 8-4

-Refer to Figure 8-4.After the tax is levied,producer surplus is represented by area

Question

Figure 8-4
 
-Refer to Figure 8-4.After the tax is levied,producer surplus is represented by area

Quizplus · Accepted Answer

The producer surplus is represented by the area above the supply curve and below the price line. After the tax is levied, the new supply curve shifts up by the amount of the tax, and the new price line intersects the supply curve at a higher point, reducing the producer surplus. Therefore, the new producer surplus is represented only by the area of F.

Figure 8-4 -Refer to Figure 8-4.After the Tax Is Levied,producer Surplus Is