Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service. The value of the service to each of them is 50 and it costs 80 to hire a housecleaner.
Suppose Bella is lazy and a spendthrift and Sefronia suspects that Bella will be willing to pay 80. What is Sefronia likely to do, given that she is as rational as any other person?
A) She might claim that she is not willing to pay for a housecleaner, hoping that Bella would pay the entire 80.
B) She will correctly rationalize that Bella's laziness and spendthrift ways are irrelevant to the decision at hand.
C) She will come clean and tell Bella that since Bella is lazy and a spendthrift she should pay a bigger share of the 80.
D) She might offer to do Bella's housecleaning chores if Bella would pay her 50.
Question 2
When Airbnb customers in Malibu start paying hotel taxes, this will have the potential to raise the equilibrium price in this market and, therefore, decrease efficiency. This would have a tendency to
A) decrease producer surplus and decrease deadweight loss.
B) decrease consumer surplus and increase deadweight loss.
C) maximize consumer surplus and minimize producer surplus.
D) increase consumer surplus and increase producer surplus.
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