Detail

11. Once again consider the graph to the right. The imposition of this tax leads to inefficiency in the form of excess burden or deadweight loss. The value of the excess burden or deadweight loss due to this tax is:

The excess burden or deadweight loss of a tax is the lost consumers' and producers' surplus which isn't captured in the form of tax revenues. If both supply and demand curves are straight lines it will be a triangular area equal to (tax x (reduction in equilibrium quantity)) x .5 (multiply by .5 because it is a triangle). In this case it is the shaded area to the right and is equal to:
($35 x (90 - 65)) x .5 = $437.50