Figure 8-5

-Refer to Figure 8-5.What would happen to producer surplus if the tax were imposed on the seller
A)It would fall by $600.
B)It would fall by $900.
C)It would fall by $1800.
D)It would fall by $2400.

Question

Figure 8-5
 
-Refer to Figure 8-5.What would happen to producer surplus if the tax were imposed on the seller
A)It would fall by $600. 
B)It would fall by $900. 
C)It would fall by $1800. 
D)It would fall by $2400.

Quizplus · Accepted Answer

The imposition of the tax on the seller would shift the supply curve upward by the amount of the tax ($15), resulting in a new equilibrium price of $75, as shown in Figure 8-5. As a result, the producer surplus would fall by the area of the triangle bounded by the original supply curve, the new supply curve (after the tax), and the original equilibrium price ($60). The area of this triangle is $1800, which is the amount by which the producer surplus would fall. Therefore, the correct answer is (C) It would fall by $1800.

Figure 8-5 -Refer to Figure 8-5.What Would Happen to Producer Surplus If