Econ

Assume that the demand for diamonds is more elastic than the demand for gasoline. What happens to the consumer surplus if the same percentage tax is levied on both products? a. The gain of consumer surplus is relatively small for diamonds. b. The loss of consumer surplus is relatively large for diamonds. 6- The gain of consumer surplus is relatively large for diamonds. d. The loss of consumer surplus is relatively small for diamonds. Assume that Kierra cleans Cate's house weekly for $100. Cate would be willing to pay as much as $125 weekly to have her house cleaned. Kierra's opportunity cost is $80. Refer to Scenario 8-1. What would happen if Cate is required to pay a tax of $40 when she hires someone to clean her house? a. Kierra will continue to clean Cate's house, but the consumer surplus will decline. b. Kierra will continue to clean Cate's house, but the producer surplus will decline. 0- Cate will now clean her own house. d. Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase