Figure 8-7 The graph below represents a $10 per unit tax on a good. On the graph, Q represents quantity and P represents price.

-Refer to Figure 8-7.The tax causes consumer surplus to decrease by the area
A)a.
B)B + C.
C)A + B + C.
D)A + B + C+ D + F.

Question

Figure 8-7 The graph below represents a $10 per unit tax on a good. On the graph, Q represents quantity and P represents price.
 
-Refer to Figure 8-7.The tax causes consumer surplus to decrease by the area
A)a. 
B)B + C. 
C)A + B + C. 
D)A + B + C+ D + F.

Quizplus · Accepted Answer

The tax causes a reduction in both consumer surplus (area B) and producer surplus (area C). Therefore, the total decrease in surplus is equal to the sum of B and C, which is choice B.

Figure 8-7 the Graph Below Represents a $10 Per Unit