Figure 8-3
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-3. Which of the following statements is correct?
A)Total surplus before the tax is imposed is $500.
B)After the tax is imposed, consumer surplus is 45 percent of its pre-tax value.
C)After the tax is imposed, producer surplus is 45 percent of its pre-tax value.
D)Total surplus after the tax is imposed is $500.

Question

Figure 8-3
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-3. Which of the following statements is correct?
A)Total surplus before the tax is imposed is $500. 
B)After the tax is imposed, consumer surplus is 45 percent of its pre-tax value. 
C)After the tax is imposed, producer surplus is 45 percent of its pre-tax value. 
D)Total surplus after the tax is imposed is $500.

Quizplus · Accepted Answer

Without access to Figure 8-3, the correct answer cannot be determined based on visual data or specific numbers provided in the figure. However, based on the typical analysis of tax impacts in economics, total surplus before a tax is imposed is generally higher than after a tax is imposed due to the creation of deadweight loss. Therefore, statements B, C, and D, which imply specific outcomes after a tax is imposed, cannot be verified without the figure. Statement A about the total surplus before the tax could be considered correct in a hypothetical scenario, but without the figure, this is speculative.

Figure 8-3 the Vertical Distance Between Points a and B Represents a Represents