The supply curve for motor oil is the typical upward-sloping straight line,and the demand curve for motor oil is the typical downward-sloping straight line.When motor oil is taxed,the area on the relevant supply-and-demand graph that represents the deadweight loss is
A)larger than the area that represents consumer surplus in the absence of the tax.
B)larger than the area that represents government's tax revenue.
C)a triangle.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When motor oil is taxed, the deadweight loss is represented by a triangle between the supply and demand curves, and is smaller than the overall tax revenue and consumer surplus. Therefore, options A and B are incorrect. The answer is C, a triangle.

The Supply Curve for Motor Oil Is the Typical Upward-Sloping