-In the Above Figure, Suppose the Government Subsidizes the Production

Multiple Choice

-In the above figure, suppose the government subsidizes the production of milk so that milk production increases to 8 million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of negative consumer and producer surplus that results when output exceeds the efficient level.)

A) $12.5 million
B) $6.25 million
C) $4.50 million
D) $2.25 million