Figure 8-3
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-3. As a result of the tax,
A)consumer surplus decreases from $200 to $80.
B)producer surplus decreases from $200 to $145.
C)the market experiences a deadweight loss of $80.
D)total surplus increases from $180 to $200.

Question

Figure 8-3
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-3. As a result of the tax,
A)consumer surplus decreases from $200 to $80. 
B)producer surplus decreases from $200 to $145. 
C)the market experiences a deadweight loss of $80. 
D)total surplus increases from $180 to $200.

Quizplus · Accepted Answer

A tax creates a deadweight loss because it reduces the quantity traded below the efficient market equilibrium, leading to a loss in total surplus that is not offset by tax revenue.

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