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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Business

Margaret Rios

29 November, 02:37

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)

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Weston Nicholson · Answer 1

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.

Brendon Conway · Answer 2

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