Figure 4-5
-Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the triangular area ABC represent?
A) the amount of revenue raised due to imposing the tax
B) the loss in consumer surplus due to imposing the tax
C) the loss in producer surplus due to imposing the tax
D) the deadweight loss (or excess burden) caused by the tax

Question

Figure 4-5 
-Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the triangular area ABC represent?
A) the amount of revenue raised due to imposing the tax 
B) the loss in consumer surplus due to imposing the tax 
C) the loss in producer surplus due to imposing the tax 
D) the deadweight loss (or excess burden) caused by the tax

Quizplus · Accepted Answer

The triangular area ABC represents the deadweight loss caused by the tax, which is the loss of economic efficiency when the equilibrium outcome is not achieved due to the tax.

Figure 4-5 -Figure 4-5 Represents the Market for Gasoline Before and After