Use the Figure Below to Answer the Following Question(s)

question 266

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-9
-Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. What does the triangular area abc represent?

• A) the revenue the government derives from the tax
• B) the tax paid by consumers
• C) the tax paid by producers
• D) the deadweight loss (or excess burden) created by the tax

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Definitions:

After-Tax Income

The amount of income that remains after all taxes have been deducted.

Sales Tax

A tax levied by a government on the sale of goods and services, typically calculated as a percentage of the selling price.

Excise Taxes

Taxes imposed on specific goods, services, or activities, often used to discourage consumption of certain items or to raise revenue for targeted purposes.

Consumption Taxes

Taxes imposed on spending on goods and services, such as sales tax or Value Added Tax (VAT).