Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.Producer surplus without the tax is
A)$4,and producer surplus with the tax is $1.
B)$4,and producer surplus with the tax is $3.
C)$10,and producer surplus with the tax is $1.
D)$10,and producer surplus with the tax is $3.

Question

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.Producer surplus without the tax is
A)$4,and producer surplus with the tax is $1. 
B)$4,and producer surplus with the tax is $3. 
C)$10,and producer surplus with the tax is $1. 
D)$10,and producer surplus with the tax is $3.

Quizplus · Accepted Answer

Without the tax, producer surplus is the area between the supply curve and the equilibrium price ($4). With the tax, producer surplus decreases to the area between the supply curve and the new equilibrium price after the tax ($1). Therefore, the correct answer is A.

Figure 8-2 the Vertical Distance Between Points a and B Represents a Represents