Chapter 50, Problem 3MCQ

To determine

The area where the tax revenue and the deadweight loss will be represented on the graph.

Explanation of Solution

BD shows the area of tax revenue on graph and CE represents the area of deadweight loss because equilibrium price is P2 and equilibrium quantity is Q2 and the tax is levied from P1-P3.

Therefore, the correct option is d.

Economics Concept Introduction

Introduction:

When supply and demand are out of equilibrium then there is deadweight loss due to market inefficiency.