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

Question

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

Quizplus · Accepted Answer

The deadweight loss is the loss in total surplus that occurs because the tax reduces the quantity of the good traded. It is represented by the area of the triangle formed between the supply and demand curves, which is I+Y.

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