Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The loss in total welfare that results from the tax is represented by area
A)A+B+D+F.
B)A+B+C.
C)D+H+F.
D)C+H.

Question

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The loss in total welfare that results from the tax is represented by area
A)A+B+D+F. 
B)A+B+C. 
C)D+H+F. 
D)C+H.

Quizplus · Accepted Answer

The loss in total welfare due to a tax is represented by the deadweight loss, which is the area of the triangles that are not recovered by either consumer or producer surplus, typically labeled as C and H in economic diagrams.

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