Question
The market demand for stuffed rabbits is Q = 2,600 - 20P, and the government intends to place a GHS4 tax on stuffed rabbit purchases
The market demand for stuffed rabbits is Q = 2,600 - 20P, and the government intends to place a GHS4 tax on stuffed rabbit purchases (per rabbit). 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).
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Fundamentals of Investment Management
Authors: Geoffrey Hirt, Stanley Block
10th edition
0078034620, 978-0078034626
