For good A,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good A is taxed,the area on the relevant supply-and-demand graph that represents the deadweight loss is

Question

Quizplus · Accepted Answer

When a tax is imposed on a good, both the consumer and producer surplus decrease. The area that represents the deadweight loss is the triangle formed between the new supply curve, the original supply curve, and the demand curve. This area represents the loss of welfare that results from the tax. It is typically smaller than the tax revenue generated by the government and larger than the reduction in consumer surplus. Therefore, the correct answer is C, a triangle.

For Good A,the Supply Curve Is the Typical Upward-Sloping Straight