A. Suppose the market for widgets in Freedonia is perfectly competitive. Demand for widgets in Freedonia is given by Q^D = 200 - P and supply of widgets in Freedonia is given by Q^S = 4P where quantity is in units per month and price is in dollars per unit. Freedonian government imposes a $10 per unit excise tax on widgets (ie the tax is paid by the producers.)

Deadweight loss created by this tax is:

a) 20

b) 40

c) 60

d) 80

B. Consider a competitive industry. The demand is Q^D(P) = 50 - P and the supply is Q^S(P) = 4P (where quantities are in units and prices are per unit).

Producer surplus in this industry is:

a) 100

b) 200

c) 300

d) 400