Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.Without a tax,total surplus in this market is
A)$3,000.
B)$4,800.
C)$6,000.
D)$7,200.

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.Without a tax,total surplus in this market is
A)$3,000. 
B)$4,800. 
C)$6,000. 
D)$7,200.

Quizplus · Accepted Answer

Without a tax, the equilibrium quantity traded in the market is 60 units at a price of $100. Thus, total consumer surplus is (1/2)(100-50)(60)= $1,800 and total producer surplus is (1/2)(100-20)(60)= $2,400, resulting in total surplus of $4,200.

Figure 8-6 the Vertical Distance Between Points a and B Represents a Represents