Use the Following Information to Answer the Following Questions

question 117

Multiple Choice

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.

-Which areas represent the deadweight loss created as a result of the tax?

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

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Definitions:

Average Total Cost

Represents the per-unit total cost of production, calculated by dividing the total cost by the total quantity produced.

Falling

The process or action of moving downwards, typically used in economics to describe a decrease in prices or values.

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.

Long Run

A period during which all factors of production and costs are variable, allowing full adjustment to any change in market conditions.