According to the information provided, assume that Joe is required to pay a tax of $30 when he hires someone to clean his house.Which of the following is true?
A)Jane will continue to clean Joe's home, but consumer surplus will decline
B)Joe will now clean his own home
C)Jane will continue to cleans Joe's home but her producer surplus will decline
D)total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase

Question

Quizplus · Accepted Answer

The tax reduces the consumer surplus for Joe because he has to pay an additional $30, but Jane will continue to clean the house as long as the price after tax is acceptable to her.

According to the Information Provided, Assume That Joe Is Required