📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    ⚡ Month End Offer- Few Hours Left Flat 55% Off On All Courses!! Coode - OCT55 Enroll Now ⚡
    00:00:00 AM Left

    Question

    Claudia would be willing to pay as much as $100 per week

    to have her house cleaned. John's opportunity cost of cleaning Claudia’s house is $70 per week. Assume Claudia is required to pay a tax of $40 when she hires someone to clean her house for a week. Which of the following is correct?
    A Claudia will now clean her own house Correct Answer Incorrect Answer
    B John will continue to clean Claudia’s house, but his producer surplus will decline. Correct Answer Incorrect Answer
    C Claudia will continue to hire John to clean her house, but her consumer surplus will decline. Correct Answer Incorrect Answer
    D Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Claudia cleans her own house as its beneficial to her compared to other alternatives.

    Practice Next
    More Research Questions
    ask-question