A tax in an industry would result in:
A)a decrease in consumer surplus.
B)a decrease in producer surplus
C)a decrease in the gains from trade.
D)all of the above.

Question

A tax in an industry would result in:
A)​a decrease in consumer surplus.
B)​a decrease in producer surplus
C)​a decrease in the gains from trade.
D)​all of the above.

Quizplus · Accepted Answer

A tax in an industry would lead to an increase in the price paid by consumers and a decrease in the price received by producers. This would result in a decrease in consumer and producer surplus. Additionally, the gains from trade in the industry would decrease due to the inefficiency resulting from the tax. Therefore, all of the above choices are correct.

A Tax in an Industry Would Result In