Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.Total surplus after the tax is measured by the area
A)I+Y.
B)J+K+L+M.
C)I+Y+B.
D)I+J+K+L+M+Y.

Question

Figure 8-1 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.Total surplus after the tax is measured by the area
A)I+Y. 
B)J+K+L+M. 
C)I+Y+B. 
D)I+J+K+L+M+Y.

Quizplus · Accepted Answer

After the tax is imposed, the new equilibrium is at point Q', where the price paid by consumers is P' and the price received by producers is P''. The total surplus after the tax is measured by the areas of consumer surplus (J+K), producer surplus (L), and government revenue (M). Therefore, the total surplus after the tax is J+K+L+M.

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