Figure 8-9
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-9.The total surplus without the tax is
A)$8,000.
B)$12,000.
C)$20,000.
D)$40,000.

Question

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The total surplus without the tax is
A)$8,000. 
B)$12,000. 
C)$20,000. 
D)$40,000.

Quizplus · Accepted Answer

The total surplus without the tax is the sum of consumer surplus and producer surplus, which is the triangle with vertices at points A, B, and D. Using the formula for the area of a triangle (base times height divided by 2), we have:

Total surplus without tax = (12 - 4) x ($2,000 - $0) / 2 = $16,000

Therefore, the correct answer is C) $20,000, which is the option closest to $16,000.

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