Use the Following Information to Answer the Next Fifteen Questions

question 61

Multiple Choice

Use the following information to answer the next fifteen questions.
The following graph depicts a market where a tax has been imposed. Pₑ was the equilibrium price before the tax was imposed, and Qₑ was the equilibrium quantity. After the tax, PC is the price that consumers pay, and PS is the price that producers receive. QT units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers.

-Which areas represent the amount of producer surplus lost due to the tax?

• A) G
• B) A + B + C + E
• C) C
• D) C + G
• E) B + F

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Definitions:

Income

Refers to the money received, especially on a regular basis, for work or through investments.

Normal Goods

Goods for which demand increases as consumer income rises, and falls when consumer income decreases, opposite to inferior goods.

Inferior Goods

Goods whose demand decreases as the income of consumers increases, in contrast to normal goods.

Income

Income generated regularly from employment or investments.