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A-Level Economics · Indirect tax diagram question

Which area is PRODUCER SURPLUS after the tax?

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The diagram

The answer

The triangle O C F. Above S, below the £3 producers keep, out to point F: OCF — the squeeze that pushes marginal firms toward shutdown. Producers keep £3 on 3 units: PS shrinks to OCF, measured off the original S. Comparing OCF with OBG before is exactly the 'impact on the producer' paragraph from the chain.

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This is one of 9 questions on the indirect tax diagram — every corner lettered, every wrong answer diagnosed.

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