What area represents the deadweight cost of the tax

Reference no: EM131442952

Question: Use the diagram to answer the following questions (a-d).

a. At the equilibrium price before the tax is imposed, what area represents consumer surplus? What area represents producer surplus?

b. Say that a tax of $T per unit is imposed in the industry. What area now represents consumer surplus? What area represents producer surplus?

c. What area represents the deadweight cost of the tax?

d. What area represents how much tax revenue is raised by the tax?

Reference no: EM131442952

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