Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?
A)Total surplus increases by $1,500.
B)Total surplus increases by $3,000.
C)Total surplus decreases by $1,500.
D)Total surplus decreases by $,3000.

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?
A)Total surplus increases by $1,500. 
B)Total surplus increases by $3,000. 
C)Total surplus decreases by $1,500. 
D)Total surplus decreases by $,3000.

Quizplus · Accepted Answer

When a tax is imposed, the quantity supplied and demanded decreases since sellers and buyers bear a portion of the tax burden. As a result, the consumer surplus and producer surplus both decrease, leading to a decrease in total surplus. In this case, the decrease in total surplus is equal to the area of the pink triangle, which is $1,500.

Figure 8-6 the Vertical Distance Between Points a and B Represents a Represents