Student ID: e Feb 26, 2024, 11:30 AM, to be submitted in Class Scenario 1: 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. 38. Based on Scenario 1, if Kierra cleans Cate's house, what is the consumer surplus? a. $25 b. $80 C. $100 d. $125 39. Based on Scenario 1, if Kierra cleans Cate's house, what is the producer surplus? a. $20 b. $25 c. $80 d. $100 house? 40. Based on Scenario 1, what would happen if Cate is required to pay a tax of $40 when she hires someone to clean her a. Cate will now clean her own house. b. Kierra will not continue to clean Cate's house, but the producer surplus will decline . c . Total economic welfare ( consumer surplus plus producer surplus plus tax revenue ) will increase . d. Kierra will continue to clean Cate's house, but the consumer surplus will decline. 41. What is the relationship between the deadweight loss and tax rates? a, Deadweight loss does not depend on tax rates. b. Deadweight loss is higher when tax rates are higher than when tax rates are lower. c. Tax rates are lower when deadweight loss is higher. d. Deadweight loss causes tax rates to change but not vice versa. 42. How are the size of the tax and the deadweight loss of a tax related? a. positively related b. negatively related c. independent of each other d. equal to each other 43. What happens if a government increases the tax rate? a. As the tax rate increases, tax revenue continually rises and deadweight loss continually falls. b. As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls. C. As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises. d. As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls . 44. What is the shape of the Laffer curve? a. inverted U-shaped b. upward sloping c. U-shaped d. downward sloping 45. When a country is on the downward-sloping side of the Laffer curve, what will cutting tax rates do? a. lower tax revenues and increase deadweight loss b. lower both tax revenues and deadweight loss c. increase tax revenues and decrease deadweight loss d. increase both tax revenues and deadweight loss