Typically, When Government Imposes an Ad Valorem or a Specific

question 146

Multiple Choice

Typically, when government imposes an ad valorem or a specific tax on producers,

• A)both consumer surplus and producer surplus are reduced.
• B)producer surplus is reduced to zero.
• C)consumer surplus is reduced to zero.
• D)consumer surplus is preserved because producers must pay the tax.
• E)producer surplus is preserved because costs are passed on to consumers.