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Microeconomics
Learn the toughest concepts covered in Microeconomics with step-by-step video tutorials and practice problems by world-class tutors
Introduction to Taxes and Subsidies
Effects of Taxes on a Market
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Governments collect taxes to provide public services and infrastructure to an economy.
1
concept
Effects of Taxes
9m
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2
Problem
If a tax has caused the market-clearing quantity to fall to Q2, what is consumer surplus?
A
The area of (A)
B
The area of (A), (B), and (C)
C
The area of (A), (B), (C), (D), and (E)
D
The area of (A), (B), (C), (D), (E), and (F)
E
The area of (C) and (E)
3
Problem
If a tax has caused the market-clearing quantity to fall to Q2, what is total economic surplus?
A
The area of (A) and (F)
B
The area of (D), (E), and (F)
C
The area of (A), (B), (D), and (F)
D
The area of (A), (B), (C), (D), (E), and (F)
E
The area of (C) and (E)