Figure 8-6

-Refer to Figure 8-6.What would consumer surplus be after the tax is levied
A)$45
B)$75
C)$125
D)$150

Question

Figure 8-6
 
-Refer to Figure 8-6.What would consumer surplus be after the tax is levied
A)$45 
B)$75 
C)$125 
D)$150

Quizplus · Accepted Answer

Consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. In this case, the price consumers are willing to pay is $150, and the price they actually pay is $125. Therefore, consumer surplus is $150 - $125 = $25. After the tax is levied, the price consumers pay will increase to $150. Therefore, consumer surplus will decrease by $25, to $0.

Figure 8-6 -Refer to Figure 8-6.What Would Consumer Surplus Be After the Surplus