Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. The area measured by K + L represents

A) tax revenue.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) total surplus before the tax.

Question

Reagan Salinas · Accepted Answer

Final Answer : A, Explanation :  The area measured by K + L represents the tax revenue, as it is the area between the new price paid by consumers (P') and the price received by producers (P''') after the tax is imposed, multiplied by the quantity sold.

Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. The area measured by K + L represents

A) tax revenue.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) total surplus before the tax.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. The area measured by K + L representsA) tax revenue.B) consumer surplus before the tax.C) producer surplus after the tax.D) total surplus before the tax.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. The area measured by K + L represents

A) tax revenue.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) total surplus before the tax.