Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.One effect of the tax is to
A)reduce consumer surplus by $108.
B)reduce producer surplus by $72.
C)create a deadweight loss of $60.
D)All of the above are correct.

Question

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.One effect of the tax is to
A)reduce consumer surplus by $108. 
B)reduce producer surplus by $72. 
C)create a deadweight loss of $60. 
D)All of the above are correct.

Quizplus · Accepted Answer

The tax reduces both consumer and producer surplus, leading to a total loss of $180 ($108 in consumer surplus + $72 in producer surplus). Additionally, the tax creates a deadweight loss of $60, resulting in all of the choices being correct.

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