Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.Total surplus with the tax in place is
A)$1,500.
B)$3,600.
C)$4,500.
D)$6,000.

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.Total surplus with the tax in place is
A)$1,500. 
B)$3,600. 
C)$4,500. 
D)$6,000.

Quizplus · Accepted Answer

Total surplus with tax in place can be calculated by finding the area between the demand curve, supply curve and the tax line. Using the triangle method, we get the total surplus to be ((8-4)*(80-60))/2 + ((10-8)*(60-40))/2 + ((12-10)*(40-20))/2 = $4,500. Therefore, the best choice is C.

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