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:

Price

The total money needed for acquiring a good, service, or asset.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust to changes in demand.

TC

Total Costs, the sum of all costs incurred in the production of goods or services.

TR

Total Revenue; the total receipts from sales of goods or services provided by a company before any deductions are made.