Figure 8-11
-Refer to Figure 8-11.The deadweight loss of the tax is represented by the
A)length of the line segment connecting points A and B.
B)length of the line segment connecting points A and C.
C)length of the line segment connecting points B and C.
D)area of the triangle bounded by the points A,B,and C.

Question

Figure 8-11 
-Refer to Figure 8-11.The deadweight loss of the tax is represented by the
A)length of the line segment connecting points A and B. 
B)length of the line segment connecting points A and C. 
C)length of the line segment connecting points B and C. 
D)area of the triangle bounded by the points A,B,and C.

Quizplus · Accepted Answer

The deadweight loss of the tax is the area of the triangle bounded by the points A, B, and C, which represents the loss of consumer surplus and producer surplus due to the distortionary effects of the tax on the market. Therefore, the best choice is D.

Figure 8-11 -Refer to Figure 8-11.The Deadweight Loss of the Tax Is