The cheese-making industry in Castoria is competitive, with an upward-sloping supply curve and a downward-sloping demand curve.

Question:

The cheese-making industry in Castoria is competitive, with an upward-sloping supply curve and a downward-sloping demand curve. The government gives cheese producers a subsidy of $T for each kilogram of cheese they make. Will consumer surplus increase? Will producer surplus increase? Will there be a deadweight loss?