Figure 18-1

-Refer to Figure 18-1.Area B + C represents
A)the portion of sales tax revenue borne by consumers.
B)the portion of sales tax revenue borne by producers.
C)the excess burden of the sales tax.
D)sales tax revenue collected by the government.

Question

Figure 18-1
 
-Refer to Figure 18-1.Area B + C represents
A)the portion of sales tax revenue borne by consumers. 
B)the portion of sales tax revenue borne by producers. 
C)the excess burden of the sales tax. 
D)sales tax revenue collected by the government.

Quizplus · Accepted Answer

Area B + C represents the portion of sales tax revenue borne by consumers. Area B represents the increase in consumer price due to the sales tax and Area C represents the decrease in quantity demanded due to the increase in price, which results in a loss of consumer surplus. Therefore, consumers bear the burden of this portion of the sales tax.

Figure 18-1 -Refer to Figure 18-1.Area B + C Represents