QUESTION 6
Refer to the graph below.
P
A
B
E
F
C
S
D
tax
D
Q
What is consumer surplus after the tax is implemented?
OD
OB + C
OE + F
O A
QUESTION 7
Suppose the government implements a tax on the consumption of wheat. Which of the following would you
expect to happen?
The equilibrium quantity of wheat, the producer surplus, and the well-being of consumers of wheat would all
decrease.
The equilibrium quantity of wheat, the effective price of wheat paid by the buyers, and the consumer surplus
would all increase.
The equilibrium quantity of wheat, the effective price of wheat paid by the buyers, and the consumer surplus
would all decrease.
The equilibrium quantity of wheat, the producer surplus, and the well-being of consumers of wheat would all
increase.