Final Answer:
The deadweight loss resulting from a government tax of $4 per bushel of wheat is represented by area c. B. (Option c)
Step-by-step explanation:
Exhibit 7-11 likely illustrates the supply and demand curves for wheat. When the government imposes a tax on each bushel of wheat, it disrupts the market equilibrium. The deadweight loss, which is the loss of economic efficiency that occurs due to the tax, is represented by the area between the new supply and demand curves. In this case, it corresponds to area c. B.
To calculate deadweight loss precisely, one would need the specific data points and equations for the supply and demand curves. The loss occurs because the tax leads to a reduction in both consumer and producer surplus, indicating a market inefficiency. The area c. B captures this loss in economic welfare resulting from the tax. It is crucial to understand deadweight loss in the context of taxation as it provides insights into the impact on market participants and overall economic efficiency.
In summary, by identifying area c. B on Exhibit 7-11, one can visualize and understand the deadweight loss caused by the government tax on wheat. This conceptualization aids in comprehending the economic implications of taxation on a specific market, contributing to a deeper understanding of the dynamics between government intervention and market efficiency.(Option c)