Microeconomic Principles in Verse
by Greg Trandel*

Marginal benefit and marginal cost
When you set them equal, no gain is ever lost.
With the advantage that is called comparative,
Specialize and trade should be an imperative.

Opportunity cost; constraint of the budget,
What he'll buy, you'll know; you won't have to fudge it.
Market equilibrium is the reason why
Price is at the crossing of demand and supply.

Marginal benefit, marginal cost.

If you keep these straight, then give yourself a hand.
When the D curve shifts, that's a change in demand.
But when people buy more 'cause of a shift in S,
Change in quantity demanded is what you express.

Little move in quantity when the price does change,
Elasticity's in the inelastic range.
When demand's elastic and the selling price rise,
Fall in revenue; the firm's owner always sighs.

Marginal revenue, marginal cost.

Profit in a market, they'll be new investment,
To keep makin' cash, a firm has to invent.
In the market price, there is lots o' information,
Invisible hand leads to coordination.

Competitive outcome promote efficiency,
Wisely-used resources is what you're gonna see.
Sometimes gotta choose: efficiency or fairness.
Econ's not enough; need political awareness.

Marginal revenue, marginal cost.

When a firm chooses price it won't get in a bind,
MR equal MC is the rule to keep in mind.
Why is monopoly not our favorite outcome?
Price is high, buying low, problems it'll cause some.

How to differentiate with regard to price?
Elasticity big, pricing low would be nice.
If your action harms me in a way external,
Too much of it you'll do; write that in your journal.

Marginal benefit, marginal social cost.

'Cause people may ride freely on a public good,
Mandatory taxes may help us where they could.
When information is rather asymmetric,
Adverse selection problem; it's like a bad trick.

It won't always help when the gov'ment gets involved,
Motivation problems aren't easily solved.
Help the group or me, the dilemma of a prisoner.
Learn these things; you should pass the final quiz in here.


  *   Inspired by — and in a couple cases, stolen (with permission) from i— "The Econ 1 Rap" by Daniel S. Hamermesh. Here's a fairly recent version of Prof. Hamermesh's work.  

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