I’m not quite sure what this falls under – poetry? music? But as an economics graduate, it gave me a giggle. ‘Think margin, think margin’!

Thanks to the Freakonomics blog for reproducing Dan Hamermesh’s summary to his introductory microeconomics class at the University of Texas.

It’s all about the Law of Supply and Demand,
Prices are set by the Invisible Hand.

A floor that’s put on your product’s price
Is something the consumer will find not nice.

If you raise your price when demand’s elastic,
Your revenue will drop and you’ll go ballistic.

Get the same extra utiles for each extra dollar,
The maximum utility is sure to follow.

Produce where price equals marginal cost
If you don’t you’ll find that your profits are lost.

Always think about cost, opportunity,
If not, you’ll find you’re hurting your community.

Think margin, think margin.

Monopolists set MR to marginal cost
The result is that consumer surplus is lost

Make sure your strategies are subgame perfect
Plan your strategic interactions without any defect.

Tax the inelastic, or you’ll be hurtin’
Because you’ve created a large excess burden.

With positive externalities it’s always wise,
To encourage more production — subsidize.

A tariff or a quota helps a few producers,
But consumers will always be the big losers.

Sometimes you gotta choose efficiency or fairness,
Ya need more than econs, ya need political awareness.

Think margin, think margin.

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