Figure 8-10
-Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. With the tax, the consumer surplus is

Question

Figure 8-10 
-Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. With the tax, the consumer surplus is

Quizplus · Accepted Answer

Consumer surplus is the area above the market price and below the demand curve. Before the tax, consumer surplus is the area P0ABQ0. After the tax, consumer surplus is the area P2ECQ2. The change in consumer surplus is (P0-P2) x Q2. Therefore, the correct choice is B.

Figure 8-10 -Refer to Figure 8-10. Suppose the Government Imposes a Tax