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Economics Concepts Students Should Know

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Economics Concepts Appropriate for Grades K-5
Grade Concept NE Standards USA Standards Online Lesson Links
K-5 Scarcity
Resources are limited, so people cannot have all the goods and services they want.
1.6,1.8,4.8 1 Scarcity Lessons
K-5 Choice
Deciding between two or more possible alternative objects or actions; called an economic choice for decisions among goods, services, or resources.
1.6,1.7,1.8,4.8 1,2 Choice Lessons
K-5 Opportunity Cost
The next best alternative that must be given up when a choice is made. Not all alternatives, just the next best choice.
1.6,1.7,1.8,4.8,4.9 1,4 Opportunity Cost Lessons
K-5 Goods and Services
Objects (goods) or services (activities) that can satisfy people's wants.
1.6,4.8,4.9 1 Goods and Services Lessons
K-5 Resources-Human/Natural/Capital
Anything used to produce goods and services; all natural, human and human-made aids to the production of goods and services, also called productive resources.
1.6,1.7,4.8,4.9 1 Resources-Human/Natural/Capital Lessons
K-5 Barter/Trade
The direct trading (barter) or any exchange (trade) of goods and services between people without the use of money.
1.6,4.8 5 Barter/Trade Lessons
K-5 Interdependence
People depend on each other to provide goods and services; occurs as a result of specialization of production.
1.6,4.8,4.9 6 Interdependence Lessons
K-5 Specialization
Production can often be best done by several or many people where each person specializes: does only a part of the job--the part that the person is skilled to do.
1.6,1.7,4.8,4.9 6 Specialization Lessons
K-5 Money/Medium of Exchange
A medium of exchange, which is a good (like shells or metal coins or pieces of paper) that can be used to buy other goods and services.
1.7,4.8,4.9 5,11 Money/Medium of Exchange Lessons
K-5 Saving
Not spending all of one's income; the part of income not used for consumption.
1.7,4.9 10 Saving Lessons
K-5 Spending
Purchase of currently produced goods or services; using income to buy for consumption.
1.6,1.7,4.9 5, 11 Spending Lessons
K-5 Producers/Production
People who use resources to make goods and services, also called workers./ The making of goods and services using resources.
4.8,4.9 1,7 Producers/Production Lessons
K-5 Consumers/Consumption
People whose wants are satisfied by using goods and services/using goods and services.
1.7, 4.8 1,7 Consumers/Consumption Lessons
K-5 Markets
Any setting where buyers and sellers exchange goods, services, resources, and currencies.
1.7,4.8,4.9 3,7 Markets Lessons
K-5 Prices
The value of a good or service stated in money terms.
1.7,4.8 6,7,8 Prices Lessons
K-5 Trade-offs
Giving up one thing or activity to get some of another.
1.8,4.8,4.9 2,6,15 Trade-offs Lessons
K-5 Demand
A schedule of how much consumers are willing and able to buy at each possible price during some time period
4.8 7,8 Demand Lessons
K-5 Supply
A schedule of how much producers are willing and able to produce and sell at each possible price during some time period.
4.8 7,8 Supply Lessons
K-5 Competition
Rivalry among sellers to sell (supply) goods and services, or among buyers to buy (acquire) a service or good.
4.8 9,16 Competition Lessons
K-5 Equilibrium Price
The market clearing price at which the quantity demanded by buyers equals the quantity supplied by sellers.
4.8 7 Equilibrium Price Lessons
K-5 Entrepreneurs
The human resource (person) who assumes the risk of organizing the other productive resources to produce goods and services.
4.2,4.3,4.8 1,14 Entrepreneurs Lessons
K-5 Profit
The difference between the total revenue and total cost of producintg and selling a good or service in a business; entrepreneurial income.
4.8 2,14 Profit Lessons
K-5 Functions of Money
Money is used as or "functions as" a medium of exchange, as a store of value, and as a unit of account.
1.7,4.9 11 Functions of Money Lessons
K-5 Public Goods
Goods and services that are provided by the government. They are often goods that individuals don't buy enough of, but provide everyone benefits if widely consumed, such as education or national defense.
4.9 16 Public Goods Lessons
K-5 Taxes
Required payments of money made to governments by households and business firms.
4.8 14,16 Taxes Lessons
K-5 Shortages and Surpluses
The situation resulting when the quantity demanded exceeds (shortage) or is less than (shortage) the quantity supplied at the current price of a good, service, or resource.
4.8 7,8 Shortages and Surpluses Lessons

Summary of Concepts by Grade Level

The table below is a summary of the concepts that are appropriately taught at each grade level K-6. For more detailed descriptions by grade levels, see the K-6 goals page and the evidence of learning page. For more details about the concepts and some teaching suggestions for each grade level, click on the grade level at the top row or bottom row of the table. You might also be interested in the description of student learning activities for primary and intermediate grade levels.



TABLE 2: Summary of Concepts by Grade Level
Economic Concepts Kindergarten First Second Third Fourth Fifth Sixth
Scarcity
Resources are limited, so people cannot have all the goods and services they want.
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Choice
Deciding between two or more possible alternative objects or actions; called an economic choice for decisions among goods, services, or resources.
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Goods
Objects that can be held or touched that can satisfy people’s wants.
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Services
Activities that can satisfy people’s wants.
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Opportunity Cost
The next best alternative that must be given up when a choice is made. Not all alternatives, just the next best choice.
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Resources
Anything used to produce goods and services; all natural, human and human-made aids to the production of goods and services. Also called productive resources.
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Natural Resources (land)
Gifts of nature that are present without human intervention (also called land)
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Human Resources (labor)
The quantity and quality of human effort directed toward producing goods and services (also called labor).
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Capital Resources (capital goods)
Goods made by people and used to produce other goods and services (machines and factories).
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Barter
The direct trading of goods and services between people without the use of money.
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Interdependence
People depend on each other to provide goods and services; occurs as a result of specialization.
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Money
A medium of exchange, which is a good (like shells or metal coins or peices of paper) that can be used to buy other goods and services.
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Producers / Production
People who use resources to make goods and services, also called workers./the making of goods and services using resouces.
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Consumers
People whose wants are satisfied by using goods and services.
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Specialization
The situation in which people produce the goods and services that they have resources to make, and have to trade or buy to consume other goods and services.
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Division of Labor
The process whereby workers divide up a job, so they perform only a single task or very few steps of a major production task, as when working on a assembly line.
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Productivity
The ratio of output (goods and services) to input, or the amount of output produced per unit of productive resources over a period of time.
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Markets
Any setting where buyers and sellers exchange goods, services, resources, and currencies.
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Prices
The value of a good or service stated in money terms.
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Public Goods
Goods and services that provide widespread benefits and are either difficult for individuals to buy (national defense) or many individuals would not buy enough of (elementary education) without government providing the good and/or supporting the purchases. They
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Economic Systems
The way a society organizes the production, consumption, and distribution of goods and services.
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Market Economy
An economic system where most goods and services are exchanged through private transactions by private households and businesses. Prices are determined by buyers and sellers making exchanges in private markets.
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Circular Flow
A model of an economy showing the interactions between households and business firms as they exchange goods and services and resources in markets.
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Trade/Exchange
Trading goods and services with people for other goods and services or for money. When people exchange voluntarily, they expect to be better off as a result.
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Factors of Production
Resources used by businesses to produce goods and services.
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Investment in Capital Resources
Business purchases of new plants (buildings) and equipment.
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Investment in Human Resources
Activities that increase the skills and knowledge of workers.
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Trade-offs
Giving up one thing to get some of another.
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Demand
A schedule of how much consumers are willing and able to buy at each possible price during some time period.
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Supply
A schedule of how much producers are willing and able to produce and sell at each possible price during some time period.
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Equilibrium Price
The market clearing price at which the quantity demanded by buyers equals the quantity supplied by sellers.
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Competition
Rivalry among sellers to sell (supply) goods and services, or among buyers to buy (acquire) a service or good.
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Cost of Production
The total paid for all resources used by a business in producing goods and services. The owners of the resources receive the payment. 
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Profit
The difference between the total revenue and total cost of producintg and selling a good or service in a business; entrepreneurial income.
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Entrepreneurs
The human resource (person) who assumes the risk of organizing the other productive resources to produce goods and services.
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Incentives
Things that motivate and influence the behavior of households and businesses. Prices, profits, and losses act as incentives for participants to take action in a market economy.
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Taxes
Required payments of money made to governments by households and business firms.
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Income Tax
Taxes paid by households and business firms based on the amount of income they receive.
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Property Tax
Taxes paid by households and businesses based on the value of land and buildings they own.
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Sales Tax
Taxes paid on the value of goods and services people buy
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Unemployment
The situation in which people are willing and able to work at current wages but do not have jobs.
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Shortages
The situation resulting when the quantity demanded exceeds the quantity supplied at the current price of a good, service, or resource.
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Surpluses
The situation resulting when the quantity supplied exceeds the quantity demanded at the current price of a good, service, or resource.
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Economic Concepts Kindergarten First Second Third Fourth Fifth Sixth

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