Calculate the deadweight loss of given tax

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Reference no: EM131200073

The market demand for stuffed rabbits is Q = 2,600 - 20P, and the government intends to place a $4 per bunny tax on stuffed rabbit purchases. Calculate the deadweight loss of this tax when:
a. Supply of stuffed rabbits is Q = 400.

b. Supply of stuffed rabbits is Q = 12P.

c. Explain why the deadweight loss calculations differ between (a) and (b).

Reference no: EM131200073

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