Figure 8-9
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-9.The producer surplus without the tax is
A)$3,000.
B)$8,000.
C)$12,000.
D)$24,000.

Question

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The producer surplus without the tax is
A)$3,000. 
B)$8,000. 
C)$12,000. 
D)$24,000.

Quizplus · Accepted Answer

The producer surplus without the tax can be calculated by finding the area above the supply curve and below the equilibrium price (which is $6 in this case). 
The area of the triangle formed by points A, B and E is 1/2 * (6-2) * 4, which is $8. 
The area of the rectangle formed by points B, C, E and F is (6-2) * 2, which is $8. 
Adding these two areas gives us the total producer surplus without the tax, which is $16,000.

Figure 8-9 the Vertical Distance Between Points a and C Represents a Represents