-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.The loss in social welfare resulting from this price support equals

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The loss in social welfare resulting from this price support equals [$3 ∗ (Q₂ - Q₁)] - h.The price support creates a surplus of milk, which is the difference between Q₂ and Q₁. The government must purchase this surplus at the support price of $3 per gallon, which costs taxpayers [$3 ∗ (Q₂ - Q₁)]. In addition, the price support reduces consumer surplus by h, which is the difference between the equilibrium price and the support price multiplied by the quantity demanded at the support price. The total loss in social welfare is therefore [$3 ∗ (Q₂ - Q₁)] - h.

-The Above Figure Shows Supply and Demand Curves for Milk