Total surplus equals the sum of consumer plus producer surplus. what happens to total surplus in a market when the government imposes a tax?

Question

Alisha Schultz

Business

2 June, 10:02

Total surplus equals the sum of consumer plus producer surplus. what happens to total surplus in a market when the government imposes a tax?

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Answers (2)

Know the Answer?

Dorian Hale · Answer 1

The sum of consumer surplus and producer surplus is the answer.

Ellen · Answer 2

The correct answer should be that the total surplus increases but by less than the amount of the tax. This happens if the tax is not larger than the producer surplus in which case it would negate and the total would not grow at all. This doesn't happen however since imposing such higher taxes is impossible and riots would surely happen.