Use the following to answer questions:
Figure: Deadweight Loss
-(Figure: Deadweight Loss) Which of the areas in this figure represents the lost consumer surplus resulting from a $2 tax?
A) A
B) B
C) B + E
D) B + C

Question

Use the following to answer questions:
Figure: Deadweight Loss 
-(Figure: Deadweight Loss) Which of the areas in this figure represents the lost consumer surplus resulting from a $2 tax?
A) A 
B) B 
C) B + E 
D) B + C

Quizplus · Accepted Answer

Area B represents the reduction in consumer surplus caused by the tax, and area E represents the reduction in producer surplus caused by the tax. Therefore, the combined area of B and E (B + E) represents the total deadweight loss resulting from the tax.

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