Figure 8-5

-Refer to Figure 8-5.What happens to consumer surplus when a tax is imposed in this market?
A)It falls by $3,600.
B)It falls by $2,700.
C)It falls by $1,800.
D)It falls by $900.

Question

Figure 8-5
 
-Refer to Figure 8-5.What happens to consumer surplus when a tax is imposed in this market?
A)It falls by $3,600. 
B)It falls by $2,700. 
C)It falls by $1,800. 
D)It falls by $900.

Quizplus · Accepted Answer

When a tax is imposed, the price paid by consumers will increase from $8 to $9. Therefore, the consumer surplus will decrease by the triangle BCD, which is equal to the area of the triangle (1/2) x (9-6) x 1,200 = $2,700. Therefore, the correct answer is B.

Figure 8-5 -Refer to Figure 8-5.What Happens to Consumer Surplus When a Consumer