Figure 8-10
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.The deadweight loss of the tax is
A)[1/2 x (P0-P5)x Q5] + [1/2 x (P5-0)x Q5].
B)[1/2 x (P0-P2)x Q2] +[(P2-P8)x Q2] + [1/2 x (P8-0)x Q2].
C)(P2-P8)x Q2.
D)1/2 x (P2-P8)x (Q5-Q2).

Question

Figure 8-10 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.The deadweight loss of the tax is
A)[1/2 x (P0-P5)x Q5] + [1/2 x (P5-0)x Q5]. 
B)[1/2 x (P0-P2)x Q2] +[(P2-P8)x Q2] + [1/2 x (P8-0)x Q2]. 
C)(P2-P8)x Q2. 
D)1/2 x (P2-P8)x (Q5-Q2).

Quizplus · Accepted Answer

The deadweight loss of a tax is the loss in total surplus that occurs because the tax reduces the quantity sold in the market. It is represented by the area of the triangle formed between the supply and demand curves from Q2 to Q5, which is calculated as 1/2 x (P2-P8) x (Q5-Q2).

Figure 8-10 -Refer to Figure 8-10.Suppose the Government Imposes a Tax That