Refer to Figure 8-3. As a result of the tax,

A) consumer surplus decreases from $200 to $80.
B) producer surplus decreases from $200 to $145.
C) the market experiences a deadweight loss of $80.
D) total surplus increases from $180 to $200.

Consumer Surplus

The differential in the total price consumers are interested and capable of paying for a product or service and the actual price paid.

Producer Surplus

The gap between the price sellers are ready to accept for a good and the actual price obtained.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved, leading to an underproduction or overproduction of that good or service.