Figure 8-5 Price Pa P₁ P₂ 0 A B D L F -Tax- G 82₂ a. A b. C+EX C. B+C Od. D+E с E H Q₁ Quantity Refer to Figure 8-5. Assume the tax was levied on the producer. Which area represents the reduction in consumer surplus?

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Laffer Curve Analysis

In terms of economics, the Laffer curve was popular among those economists who were or who belonged to the supply side of the economic peripheral.  This concept was popularized by the famous supply-side economist known as Arthur Laffer. This curve illustrated the relationship between the tax rates and government revenue. It is already known that the tax which the public or individuals residing in an economy bear is the revenue or income of the government with the help of which the government does all the necessary works in the society, which is beneficial for the economy.