The supply curve and the demand curve for a good are straight lines.When the good is taxed,the area on the relevant supply-and-demand graph that represents
A)government's tax revenue is a rectangle.
B)the deadweight loss of the tax is a triangle.
C)the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A) When a good is taxed, the government collects tax revenue which is represented by a rectangle on the supply-and-demand graph. 
B) The deadweight loss of a tax is the reduction in consumer and producer surplus, which is represented by a triangle on the graph. 
C) The loss of consumer surplus caused by the tax is represented by the area between the original demand curve and the new demand curve after the tax has been imposed. This area is neither a rectangle nor a triangle. 
Therefore, all of the above choices are correct.

The Supply Curve and the Demand Curve for a Good