Sana values a pair of blue jeans at Rs400. When the price is Rs350, she purchases the jeans and gains a consumer surplus of Rs50. If a tax causes the price to increase to Rs450, Sana decides not to buy the jeans. What concept does this scenario illustrate?

Explanation

This example demonstrates the deadweight loss that occurs when a tax raises the price above the consumer's valuation, leading to a lost transaction and reduced economic efficiency. The consumer surplus is eliminated, showing the inefficiency caused by taxation.