A-LevelEconomicsGovernment microeconomic intervention9708/12 · Oct/Nov 2016 · Q131 Mark
A government imposes an indirect tax on a product with normal demand and supply curves. The tax raises $100 million. What effect will the tax have on the value of the combined consumer surplus and producer surplus?
AIt will be unaffected.
BIt will fall by less than $100 million.
CIt will fall by exactly $100 million.
DIt will fall by more than $100 million.
✓ Correct answer
D: It will fall by more than $100 million.
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