Scenario 5. Suppose demand is given by the equation P_D = 120 1.5Q_D and supply is given by the equation P_S = 40 + 2.5Q_S. Price is in dollars, quantity is in units.

1.Refer to Scenario 5. What is producer surplus in equilibrium?

a)$300

b)$500

c)$1,000

d)None of the above.

2.Refer to Scenario 5. What is the deadweight loss associated with a tax of $20 per unit?

a)$10

b)$50

c)$150

d)$300