Figure 8-5

-Refer to Figure 8-5.With a tax imposed in this market,what would total surplus be
A)$1500
B)$3600
C)$4500
D)$6000

Question

Figure 8-5
 
-Refer to Figure 8-5.With a tax imposed in this market,what would total surplus be
A)$1500 
B)$3600 
C)$4500 
D)$6000

Quizplus · Accepted Answer

With a tax imposed in the market, the new equilibrium quantity will be Q2, and the price paid by consumers will be Pc, while the price received by producers will be Pv. Total surplus can be calculated as the area of the trapezoid formed by Q1, Q2, Pc, and Pv. Using the formula for the area of a trapezoid, total surplus with the tax can be calculated as (1/2)*(Q2-Q1)*(Pv+Pc)= (1/2)*(30-10)*(100+150)= $4500. Therefore, the best choice is C.

Figure 8-5 -Refer to Figure 8-5.With a Tax Imposed in This Market,what