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The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
After the tax is imposed, consumers' surplus is equal to
area A + B.
area B.
area B + C.
area A + B + C + D + E.
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