Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area
A)A.
B)A+B+C.
C)D+H+F.
D)F.

Question

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area
A)A. 
B)A+B+C. 
C)D+H+F. 
D)F.

Quizplus · Accepted Answer

After the tax is imposed, the new equilibrium is at point E, with a price of P2 and a quantity of Q2. The producer surplus is represented by the area between the supply curve and the new equilibrium price, which is only represented by area F. Therefore, the correct choice is D.

Figure 8-5 Suppose That the Government Imposes a Tax of P3 -