Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The tax causes producer surplus to decrease by the area
A)D+F.
B)D+F+G.
C)D+F+J.
D)D+F+G+H.

Question

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.The tax causes producer surplus to decrease by the area
A)D+F. 
B)D+F+G. 
C)D+F+J. 
D)D+F+G+H.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the price line. The tax causes the supply curve to shift up, which reduces the producer surplus by the area D+F.

Figure 8-8 Suppose the Government Imposes a $10 Per Unit Tax on Tax