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

Question

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

Quizplus · Accepted Answer

The tax causes a reduction in producer surplus which is represented by the area D+H. Thus, the best choice is C because it shows the reduction in producer surplus due to the tax.

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