If a tax has caused the market-clearing quantity to fall to Q2, what is total economic surplus?

The area of (A), (B), (D), and (F)

If a tax has caused the market-clearing quantity to fall to Q2, what is total economic surplus?

Alright. If a tax has caused the market clearing quantity to fall to q2, what is total economic surplus? So again, here we have a tax and we are at q2, right? We're at this lower quantity because of the tax, we're not at the equilibrium quantity of q quantity of q one. So it's asking us what is total economic surplus in this case? So if you remember, when there's a tax, there's gonna be 3 things that are economic surplus. We're gonna have our consumer surplus, our producer surplus, as well as the tax revenue is still part of surplus. We didn't lose that like a deadweight loss, it's still part of the surplus. So let's go ahead and figure that out. So our consumer surplus is going to be that amount above the line, right? Above the price that consumers pay, but below the demand curve. So that's going to be that area A. And what about the producer surplus? That's going to be the amount below the price that the producers pay or producers receive, right? And that's going to be this area F. But remember, our economic surplus also includes the tax revenue and the tax revenue is the amount of the tax, which is this amount between the prices, right? Between what the the consumer pays and the seller receives, that's the amount of the tax and the quantity exchanged, right? So we're going to see this yellow area, that is going to be our tax revenue, right? So the sum of all of these is going to be our total economic surplus, so the area of C plus E, those areas are our deadweight loss, right? Everything else is our economic surplus. A plus B plus D plus F and that's gonna be C, right? The answer is C, area of A, B, D and F, Alright. So that's the answer there. Let's go ahead and move on.

If a tax has caused the market-clearing quantity to fall to Q2, what is total economic surplus?

The area of (A), (B), (D), and (F)

The area of (A), (B), (C), (D), (E), and (F)

If a tax has caused the market-clearing quantity to fall to Q2, w...

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2. Introductory Economic Models1h 10m

3. The Market Forces of Supply and Demand2h 26m

4. Elasticity2h 16m

5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m

6. Introduction to Taxes and Subsidies1h 46m

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If a tax has caused the market-clearing quantity to fall to Q2, what is total economic surplus?

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