Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The amount of deadweight loss associated with the tax is equal to
A)P3ACP1.
B)ABC.
C)P2ADP3.
D)P1DCP2.

Question

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.The amount of deadweight loss associated with the tax is equal to
A)P3ACP1. 
B)ABC. 
C)P2ADP3. 
D)P1DCP2.

Quizplus · Accepted Answer

Deadweight loss is the loss of economic efficiency that occurs when the equilibrium is not achieved in a market. In Figure 8-3, the deadweight loss is represented by the triangle ABC, which is the area between the demand and supply curves, above the quantity traded after the tax is imposed. Therefore, the correct answer is B.

Figure 8-3 the Vertical Distance Between Points a and C Represents a Represents