-The above figure shows supply and demand curves for milk.Suppose that the government passes a $2 per gallon subsidy.The deadweight loss resulting from this policy will be
A) j.
B) f + g.
C) b + c + f + g.
D) c + g.

Question

-The above figure shows supply and demand curves for milk.Suppose that the government passes a $2 per gallon subsidy.The deadweight loss resulting from this policy will be
A) j. 
B) f + g. 
C) b + c + f + g. 
D) c + g.

Quizplus · Accepted Answer

The deadweight loss is the area of the triangle formed by the supply curve, the demand curve, and the subsidy line. This triangle is labeled "j" in the diagram.

-The Above Figure Shows Supply and Demand Curves for Milk