Figure 8-1
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J represents
A)consumer surplus after the tax.
B)consumer surplus before the tax.
C)producer surplus after the tax.
D)producer surplus before the tax.

Question

Figure 8-1 
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J represents
A)consumer surplus after the tax. 
B)consumer surplus before the tax. 
C)producer surplus after the tax. 
D)producer surplus before the tax.

Quizplus · Accepted Answer

The area measured by J represents the difference between the price consumers are willing to pay for the good and the price they actually pay after the tax. This is the definition of consumer surplus.

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