Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, producer surplus will fall from:
A. 2,500 to 1,600.
B. 5,000 to 2,500.
C. 3,200 to 1,600.
D. 5,000 to 3,200.
Answer: A
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Indicate whether the statement is true or false