Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by
A)$130,producer surplus decreases by $170,tax revenue is $240,and deadweight loss is $60.
B)$150,producer surplus decreases by $150,tax revenue is $240,and deadweight loss is $60.
C)$160,producer surplus decreases by $160,tax revenue is $240,and deadweight loss is $80.
D)$240,producer surplus decreases by $240,tax revenue is $400,and deadweight loss is $80.

Question

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by
A)$130,producer surplus decreases by $170,tax revenue is $240,and deadweight loss is $60. 
B)$150,producer surplus decreases by $150,tax revenue is $240,and deadweight loss is $60. 
C)$160,producer surplus decreases by $160,tax revenue is $240,and deadweight loss is $80. 
D)$240,producer surplus decreases by $240,tax revenue is $400,and deadweight loss is $80.

Quizplus · Accepted Answer

The vertical distance between points A and B represents the tax, which is $80. Consumer surplus decreases by the triangle between points A, C, and D, which is $160. Producer surplus decreases by the triangle between points B, C, and D, which is also $160. Tax revenue is the rectangle between points C, D, E, and F, which is $240. Deadweight loss is the triangle between points A, B, and E, which is $80. Therefore, the correct answer is C.

Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents