Equilibrium

Lyrics

Verse I
Have you ever wondered what sets the price of a stock?
What makes it go up, or what makes it drop
With supply and demand we'll try to hit that target
Starting off with a graph of a sample market

We got an x axis, representing quantity
Then we draw a y showing price correspondently
Demand curve shows how much people buy
The supply curve shows what suppliers supply

The demand curve swerves down and to the right
'Cause the quantity demanded is more with a lower price
But the curve representing suppliers
Shows they make more when the price gets higher

"So what do we make of this apparent discrepancy?
Is there a way to price goods successfully?"
(Yes, there is.)
So let me break it down for y'all
With a concept we call...

Chorus
Equilibrium...
Supply equals demand, demand equals supply:
Draw a line to the x and a line to the y
The x gives your quantity the y gives the price at

Equilibrium...
No surplus and no shortages here
What's made is sold, this market will clear
Make no mistake, I'm telling you we've got

Equilibrium...

Verse II
Now, the price doesn't move just out of spontaneity
Market forces have effects unmistakably
Some change supply, some change demand
Now let me count 'em off to try to help you understand:

You've got natural events like a fire,
Or when the number of competitors gets lower or higher
If the factors of production cost more or less,
Or if there's some sort of change in what the seller expects,
Or new technology, or a project on the side
All of these can change the quantity supplied

Next up we got shifters of demand
Like the prices of the goods that go hand in hand
I'm talking complements, or substitutes,
Different tastes, or demographic attributes
If buyers' expectations or incomes change,
Demand ain't stayin' the same, we need...

Chorus

Verse III
A stock is a share of the earnings of a corporation
The price is based on an expectation
Of whether its profit's gonna fall or rise
Investors try to buy low and sell high

So when a company's doing really well
Please believe those shareholders don't wanna sell
And if nobody's selling, the price gets high
So the supply curve shifts to the left side

But at the same time, the stock is hot
And everybody wants a seat on the ride to the top
So if you wanna buy be prepared to fight
And watch as the demand curve shifts to the right

And when supply goes left and demand shifts right
The result is a higher equilibrium price
But when supply shifts right and demand to the left
The price drops... 'cause that's the opposite effect

↥ return to top

Description

This rap song teaches about equilibrium in quantity demanded and quantity supplied. "Equilibrium" explains demand curves and supply curves along the x-axis and y-axis, and the surpluses and shortages that result. It also explains market forces, including supply shifters and demand shifters. The last verse covers profits and equilibrium price, using corporate stocks as an example.

This economics song is suitable for supplementary teaching of equilibrium to high school, college, and graduate school students.

↥ return to top

Related Reading and Activities

↥ return to top

State Standards

State standards listed here are representative of school standards across the United States.

↥ return to top