Figure 8-6 The vertical distance between points A and B represents a tax in the market. Price 22 20 Supply 12 10 8 Demand ²4 100 200 300 400 500 600 700 800 900 1000 Quantity Refer to Figure 8-6. What happens to producer surplus when the tax is imposed in this m a. Producer surplus falls by $1,800. Ob. Producer surplus falls by $600. Oc. Producer surplus falls by $2,100. Od. Producer surplus falls by $900. 18 16 14

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Chapter8: Application: The Costs Of Taxation
Section: Chapter Questions
Problem 1CQQ
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Figure 8-6
The vertical distance between points A and B represents a tax in the market.
↑ Price
Supply
Demand
100 200 300 400 500 600 700 800 900 1000
Quantity
Refer to Figure 8-6. What happens to producer surplus when the tax is imposed in this market?
a. Producer surplus falls by $1,800.
Ob. Producer surplus falls by $600.
Oc. Producer surplus falls by $2,100.
d. Producer surplus falls by $900.
22
20+
18
16
14
12
10
8
6
Transcribed Image Text:Figure 8-6 The vertical distance between points A and B represents a tax in the market. ↑ Price Supply Demand 100 200 300 400 500 600 700 800 900 1000 Quantity Refer to Figure 8-6. What happens to producer surplus when the tax is imposed in this market? a. Producer surplus falls by $1,800. Ob. Producer surplus falls by $600. Oc. Producer surplus falls by $2,100. d. Producer surplus falls by $900. 22 20+ 18 16 14 12 10 8 6
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