Final answer:
The deadweight loss of a tax on stuffed fleece rabbits is calculated by determining the new equilibrium quantity and price after the tax is imposed, and then finding the area between the original demand curve and the new supply curve. The calculations differ between cases (a) and (b) due to the different shapes of the supply curves.
Step-by-step explanation:
Calculating Deadweight Loss of a Tax on Stuffed Fleece Rabbits
To calculate the deadweight loss of the tax, we need to first determine the new equilibrium quantity and price after the tax is imposed.
(a) When the supply of stuffed fleece rabbits is Q = 400, the new equilibrium quantity is 300 and the new equilibrium price is $57. The deadweight loss is determined by the area between the original demand curve and the new supply curve.
(b) When the supply of stuffed fleece rabbits is Q = 12P, the new equilibrium quantity is 137.5 and the new equilibrium price is $94.17. The deadweight loss in this case is also determined by the area between the original demand curve and the new supply curve.
The deadweight loss calculations differ between (a) and (b) because the shape of the supply curve affects the magnitude and distribution of the tax burden.