Price floors with government purchases of surpluses

Suppose the U.S. wheat market is primarily in a stable equilibrium upon S₀D₀. Assume now that the government institutes a legal price floor at P₃ per bushel of wheat. When the government will buy and store any resulting surplus, thus keeping a quantity of wheat off the market, in that case: (1) taxpayers will make total payments to farmers equivalent to 0Q₁aeQ₃ for unconsumed wheat. (2) Americans as eventual wheat consumers will buy Q₁ wheat at price P₃. (3) total revenue annually for farmers will equivalent 0P₃eQ₃. (4) the gains to farmers will be exceeded through losses to taxpayers and consumers, therefore this agricultural policy causes economic inefficiency. (5) all of the above.

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