Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+J+K+L+M+Y represents
A)total surplus before the tax.
B)total surplus after the tax.
C)consumer surplus before the tax.
D)deadweight loss from the tax.

Question

Figure 8-1 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+J+K+L+M+Y represents
A)total surplus before the tax. 
B)total surplus after the tax. 
C)consumer surplus before the tax. 
D)deadweight loss from the tax.

Quizplus · Accepted Answer

The area I+J+K+L+M+Y represents the total surplus before the tax, which includes both consumer and producer surplus.

Figure 8-1 -Refer to Figure 8-1.Suppose the Government Imposes a Tax of a Tax