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 decrease in consumer and producer surpluses that is not offset by tax revenue is the area
A)C.
B)F.
C)G.
D)C + 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 decrease in consumer and producer surpluses that is not offset by tax revenue is the area
A)C. 
B)F. 
C)G. 
D)C + F.

Quizplus · Accepted Answer

The decrease in consumer and producer surpluses that is not offset by tax revenue is the deadweight loss, which is represented by the area of C + F on the graph. Therefore, the best choice is D.

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