Figure 8-6

-Refer to Figure 8-6.What is the amount of deadweight loss in this market resulting from the levying of the tax on the seller
A)$20
B)$30
C)$40
D)$50

Question

Figure 8-6
 
-Refer to Figure 8-6.What is the amount of deadweight loss in this market resulting from the levying of the tax on the seller
A)$20 
B)$30 
C)$40 
D)$50

Quizplus · Accepted Answer

The deadweight loss in this market can be calculated as the triangle formed between the supply curve, demand curve, and the new equilibrium point (after tax). In this case, the triangle has a height of 8 (the change in price due to the tax) and a base of 5 (the change in quantity demanded and supplied). Therefore, the deadweight loss is equal to 1/2 * 8 * 5 = $40.

Figure 8-6 -Refer to Figure 8-6.What Is the Amount of Deadweight Loss