Figure 8-10
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.Without the tax,the total surplus is

Question

Figure 8-10 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.Without the tax,the total surplus is

Quizplus · Accepted Answer

Without the tax, the total surplus is the sum of consumer surplus and producer surplus. 
Consumer surplus = 1/2 x (P0-P5) x Q5 
Producer surplus = 1/2 x (P5-0) x Q5 
Total surplus = consumer surplus + producer surplus = [1/2 x (P0-P5) x Q5] + [1/2 x (P5-0) x Q5] = [1/2 x (P0-P5) + 1/2 x P5] x Q5 = P0/2 x Q5

Figure 8-10 -Refer to Figure 8-10.Suppose the Government Imposes a Tax That