Figure 8-5

-Refer to Figure 8-5.What would happen to total surplus in this market if the tax were imposed on the seller
A)It would fall by $1500.
B)It would increase by $1500.
C)It would fall by $3000.
D)It would increase by $3000.

Question

Figure 8-5
 
-Refer to Figure 8-5.What would happen to total surplus in this market if the tax were imposed on the seller
A)It would fall by $1500. 
B)It would increase by $1500. 
C)It would fall by $3000. 
D)It would increase by $3000.

Quizplus · Accepted Answer

The tax would reduce the quantity supplied, which would lead to a higher price and a lower quantity demanded. This would reduce total surplus by the amount of the tax revenue, which is $1500.

Figure 8-5 -Refer to Figure 8-5.What Would Happen to Total Surplus in to Total