Use the figure below to answer the following question(s).
Figure 4-9
-Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. What does the triangular area abc represent?
A) the revenue the government derives from the tax
B) the tax paid by consumers
C) the tax paid by producers
D) the deadweight loss (or excess burden) created by the tax

Question

Use the figure below to answer the following question(s).
Figure 4-9 
-Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. What does the triangular area abc represent?
A) the revenue the government derives from the tax 
B) the tax paid by consumers 
C) the tax paid by producers 
D) the deadweight loss (or excess burden) created by the tax

Quizplus · Accepted Answer

The triangular area abc represents the deadweight loss created by the tax, which is the loss in total welfare or efficiency in the market due to the tax.

Use the Figure Below to Answer the Following Question(s)