Final answer:
The area that represents consumer surplus after the government imposes an excise tax on the market is the triangular area labeled F. This area shows that the equilibrium price was less than what many consumers were willing to pay.
Step-by-step explanation:
The area that represents consumer surplus after the government imposes an excise tax on the market is the somewhat triangular area labeled by F. This area shows that the equilibrium price in the market was less than what many of the consumers were willing to pay.
The tax burden falls disproportionately on the sellers, and a larger proportion of the tax revenue is due to the resulting lower price received by the sellers than by the resulting higher prices paid by the buyers.
From this analysis, we can also predict whether a tax is likely to create a large revenue or not. The more elastic the demand curve, the more likely that consumers will reduce quantity instead of paying higher prices.