1	INTRODUCTION TO MICROECONOMICS Graphs and Tables Part #3
2	Figure VI-1.1: An Increase in Demand in a Constant Cost Industry, Part 1
3	Figure VI-1.2: An Increase in Demand in a Constant Cost Industry, Part 2
4	Figure VI-1.3: An Increase in Demand in a Constant Cost Industry
5	Figure VI-2.1: An Increase in Demand in an Increasing Cost Industry
6	Figure VI-2.2: An Increase in Demand in an Increasing Cost Industry
7	Figure VI-2.3: An Increase in Demand in an Increasing Cost Industry
8	Figure VI-3: An Increase in Demand in a Constant Cost Industry with Legal Entry Barriers
9	"Explanation of Figure VI-3" Explanation of Figure VI-3 (1) Entry restrictions imposed when firm is in LR equilibrium (has no effect at that point). (2) An increase in market demand occurs because income increases or population growth occurs. (3) Increased demand causes an increase in the market price which creates positive profits (P > P_LR). (4) Positive profits would cause new entry but new entry cannot occur because of the legal entry barriers. These legal entry barriers create a Welfare Loss as seen in Figure VI-4 (because the supply curve cannot increase).
10	Figure VI-4: An Increase in Demand in a Constant Cost Industry with Legal Entry Barriers
11	Table VI-1: Statistics on US Farms, 1982
12	Table VI-2: Statistics on US Farms, 1982
13	Table VI-3: Statistics on US Farms, 1985
14	"Source for Table VI-3" Source for Table VI-3: E.C. Pasour, Agriculture and the State, Independent Institute, 1990, p. 65
15	Table VI-4: Farm Production by Size Class, 2001
16	"Source" Source: EC Pasour and Randal Rucker, Plowshares and Pork Barrels, Independent Institute, 2005, p. 77.
17	Figure VI-5: The Instability of Farm Income
18	Table VI-6: The Market for Wheat with Price Support
19	Figure VI-6: The Market for Wheat with Price Supports
20	Table VI-7: The Market for Wheat with Price Supports and Production Controls (PC)
21	Figure VI-7: The Market for Wheat with Price Supports and Production Controls
22	Table VI-8: Target Prices
23	Figure VI-8: The Market for Wheat with a Target Price
24	Figure VI-9: The Welfare Loss in a Market for Wheat with a Target Price
25	"Explanation of Figure VI-9" Explanation of Figure VI-9 PG = Producers’ Gain Producers’ Gain is the difference between the Producers’ Surplus (PS’) with the subsidy and the Producers’ Surplus (PS) without the subsidy PS’ = ½ bh = ½(120)($14-$2) = $720 PS = ½ (80)($10-$2) = $320 So PG = PS’ – PS = $400
26	"Explanation of Figure VI-9" Explanation of Figure VI-9 CG = Consumers’ Gain Consumers’ Gain is the difference between the Consumers’ Surplus (CS’) with the subsidy and the Consumers’ Surplus (CS) without the subsidy CS’ = ½ bh = ½(120)($26-$2) = $1440 CS = ½ (80)($26-$10) = $640 So CG = CS’ – CS = $800
27	"Explanation of Figure VI-9" Explanation of Figure VI-9 CG = CS’ – CS = $800 PG = PS’ – PS = $400 Cost of Subsidy = (120)($14-$2) = $1440 Total Gains = PG + CG = $1200 Total Gains – Cost of Subsidy = Welfare Loss WL = $1200 - $1440 = - $240
28	Figure VI-10a: Effect of Price Supports in the Short-Run
29	Figure VI-10b: Effect of Price Supports in the Long-Run
30	"Explanation of Figure VI-10b" Explanation of Figure VI-10b (1) Since P_SUP > P_LR, existing firms will now have positive profits. (2) That will attract new entry. New entry will cause costs to rise (increasing cost industry) but prices do not fall because of the price floor. (3) New entry continues until costs have risen enough to reduce profits equal to zero. (This occurs at P_SUP.) (4) Cost of price supports is larger in the LR than the SR.
31	Table VI-9: Size of Farm and Government Payments, 2001
32	"Source" Source: EC Pasour and Randal Rucker, Plowshares and Pork Barrels, Independent Institute, 2005, p. 81.
33	Table VII-1.1: Changes in Market Concentration for Dominant Firms Over Time
34	Table VII-1.2: Dominant Firms and Market Share Over Time
35	Table VII-1.1: Average and Marginal Revenue for a Monopolist/Price Searcher
36	"Explanation of Figure VII-1.1" Explanation of Figure VII-1.1 (1) From the average-marginal relationship we note that the AR is falling (the downward-sloping demand curve) so the MR must be below it. (2) Note that as P decreases in the elastic portion of the demand curve, TR increases so MR is positive. When P decreases in the inelastic portion of the demand curve, TR falls so MR is negative. Thus MR = 0 when TR a maximum at the unit elastic point. (3) MR curve divides a line from the vertical axis to the demand curve in half.
37	Figure VII-1.2: Cost Curves of the Firm
38	Figure VII-1.3: Profit-Maximizing Firm
39	Figure VII-1.4: Monopolist/Price-Searcher Earns Negative Profits
40	"Explanation of Figure VII-1.4" Explanation of Figure VII-1.4 (1) P_m < LRAC(Q_m) and P_m < ATC_m (2) Π = TR – TC = Q(AR –ATC) < 0 (3) Π < 0 and exit in the LR occurs . (4) In a constant cost industry, exit will cause an increase in demand because remaining firms will have a bigger share of the market. (5) Demand increases until the demand curve is just tangent to the LRAC. Since P_m = LRAC(Q_m) now Π = 0 and exit ceases.
41	Figure VII-1.5: Inefficiency and Price Searchers
42	"Explanation of Figure VII-1.5" Explanation of Figure VII-1.5 (1) Π = 0 so price searcher in LR equilibrium (2) Inefficient because P_m > LRMC(Q_m)? (3) But this is as good as it gets.