Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is
A) $0.
B) $1.50.
C) $3.
D) $4.50.

Question

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is
A) $0. 
B) $1.50. 
C) $3. 
D) $4.50.

Quizplus · Accepted Answer

The loss of consumer surplus is represented by the shaded triangle in the figure. The height of the triangle is equal to the tax amount ($3) and the base of the triangle is equal to the quantity purchased after the tax is imposed (6 units). Therefore, the area of the triangle is 1/2 x 3 x 6 = $9. However, only half of the triangle represents the loss of consumer surplus (the other half is the increase in government revenue). Therefore, the loss of consumer surplus for those buyers who continue to buy the good after the tax is imposed is $4.50 (half of $9).

Figure 8-2 the Vertical Distance Between Points a and B Represents a Represents