Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Question

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Quizplus · Accepted Answer

The loss of consumer surplus is represented by the area of the triangle between the original demand curve, the new demand curve (after the tax is imposed), and the vertical distance between points A and B (which represents the tax). The area of this triangle is (1/2)(3)(1.5) = $2.25. However, only half of this triangle represents the loss of consumer surplus (the other half is the increase in producer surplus). Therefore, the loss of consumer surplus for those buyers who continue to buy the good after the tax is imposed is $1.125, which is closest to answer choice C ($1.50).

Figure 8-2 the Vertical Distance Between Points a and B Represents a Represents