Refer to Figure 8-1. Suppose the government imposes a tax of P'' - P. The area measured by J + K + I represents

A) consumer surplus after the tax.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) producer surplus before the tax.

Consumer Surplus

The gap between what consumers are prepared to pay for a product or service and what they end up spending.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive, reflecting their net gain.

Tax

A mandatory charge or alternative form of financial levy extracted from a taxpayer by governmental authorities for the aim of supporting governmental spending and numerous public financial commitments.