Asked by Chelsy Martin on Jun 12, 2024
Verified
Refer to Figure 8-2. The loss of consumer surplus as a result of the tax is
A) $12.
B) $8.
C) $18.
D) $4.
Consumer Surplus
The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually do pay.
Producer Surplus
The discrepancy between the price at which producers are inclined to sell a product and the actual price they get, frequently viewed as an indicator of the well-being of producers.
Tax
A mandatory monetary fee or a different kind of tax placed on an individual or entity by a government agency.
- Analyze the effects of taxes on consumer surplus, producer surplus, and total surplus.
Verified Answer
VH
Vicente HernandezJun 18, 2024
Final Answer :
C
Explanation :
The loss of consumer surplus due to a tax is represented by the area between the demand curve and the price consumers pay after the tax, minus the area they would have paid without the tax. This typically includes the area of a triangle or a rectangle formed due to the increase in price caused by the tax. Without seeing Figure 8-2, the correct answer is inferred based on the common understanding of how taxes affect consumer surplus in economic models.
Learning Objectives
- Analyze the effects of taxes on consumer surplus, producer surplus, and total surplus.