ECONOMICS FOR KIDS AND TEENS : WHAT IS ECONOMICS ?
- KidVestors
- Feb 7
- 5 min read
Updated: 5 days ago
What you'll learn:
Economics might sound like one of those big, scary grown-up words—right up there with taxes or mortgages. But here’s the truth: you already participate in economics every single day. Every time you buy a snack, save your allowance, decide between two things you want, or wonder why prices went up, you’re experiencing economics in real life.
Economics isn’t just about money. It’s about choices, trade-offs, and how people, businesses, and governments decide what to make, buy, sell, and save. Let’s break it down in a way that actually makes sense.
Economics for Kids and Teens : What Is Economics?
At its core, economics is the study of how people make choices when resources are limited.
We all want things—food, clothes, phones, houses, games, vacations—but we don’t have unlimited time, money, or resources. Economics helps explain:
Why things cost what they cost
How businesses decide what to sell
Why jobs exist
Why prices rise or fall
How countries grow (or shrink) economically
Economics includes big ideas like inflation, GDP, capitalism, and supply and demand, but those ideas all connect back to everyday life.
Think of economics as the behind-the-scenes system running the world.
What Is an Economy?
Before we go any further, let’s talk about something closely related to economics: the economy.
The definiton of an economy is the system a group of people use to make, buy, sell, and trade goods and services. It’s how money moves, how jobs are created, and how people get what they need and want.
Think of an economy like a giant marketplace that never sleeps.
An economy includes:
People working jobs
Businesses producing products
Consumers spending money
Governments setting rules
Your local economy might include grocery stores, schools, restaurants, and small businesses in your community. A national economy includes everything happening across an entire country. And when we zoom out even more, we get the global economy, where countries trade with each other.
Every time someone gets paid, buys something, saves money, or starts a business, they’re participating in the economy.
Economics is the study of how that system works—why prices change, why jobs exist, and how choices impact everyone involved. Once you understand the economy, a lot of everyday money questions suddenly make way more sense.
What Are Goods and Services?
One of the first building blocks of economics is understanding goods and services.
Goods are physical things you can touch.Examples:
Shoes
Phones
Books
Food
Toys
Services are actions people do for you.Examples:
Haircuts
Teaching
Lawn care
Medical care
Streaming subscriptions
When you buy a burger, you’re buying a good. When someone cooks it, serves it, or delivers it—that’s a service. Economies need both goods and services to function.
Who Are Producers and Consumers?
Every economy has two main roles:
Producers
Producers are the people or businesses that make goods or provide services.
Examples:
A factory making sneakers
A farmer growing food
A YouTuber creating videos
A company building an app
Consumers
Consumers are the people who buy or use those goods and services.
Examples:
You buying clothes
A family paying for internet
A school purchasing supplies
Here’s the cool part: you’re probably both. If you babysit, mow lawns, sell art, or run a small business, you’re a producer. When you spend that money? You’re a consumer.
Opportunity Cost: The Choice Behind Every Choice
One of the most important concepts in economics is opportunity cost.
Opportunity cost is what you give up when you choose one thing over another.
Let’s say you have $20.
You buy a video game → you don’t buy movie tickets
You save the money → you don’t spend it today
The game you didn’t buy? That’s your opportunity cost.
There’s no “right” or “wrong” choice—but understanding opportunity cost helps you make smarter decisions, especially with money, time, and goals.
Supply and Demand (Why Prices Go Up and Down)
Supply and demand is one of the most powerful forces in economics.
Supply = how much of something is available
Demand = how much people want it
When demand is high and supply is low → prices usually go up
When supply is high and demand is low → prices usually go down
Think concert tickets, sneakers, or popular toys during the holidays. If everyone wants something and there aren’t many available, it becomes more expensive.
Shortages and Surpluses
This brings us to shortages and surpluses.
Shortage
A shortage happens when there isn’t enough supply to meet demand.
Example:
Everyone wants bottled water after a storm, but stores run out
Surplus
A surplus happens when there’s too much supply and not enough demand.
Example:
A store orders too many jackets and has to put them on sale
Both shortages and surpluses affect prices, business decisions, and even jobs.
What Is Inflation?
Inflation means that prices increase over time and money buys less than it used to.
For example:
A snack that cost $1 five years ago might cost $1.50 today
Inflation isn’t always bad, but when it rises too fast, it can make life more expensive. That’s why learning how to save and invest matters—so your money can grow instead of losing value.
What Is GDP?
GDP (Gross Domestic Product) measures the total value of all goods and services a country produces.
Think of GDP as a country’s economic report card:
Higher GDP usually means more production, jobs, and spending
Lower GDP can signal economic trouble
GDP doesn’t tell the whole story, but it helps economists understand how an economy is doing overall.
Recession vs. Expansion (Boom Times)
Recession
A recession is when the economy slows down for a period of time.
Businesses earn less
Jobs can be lost
People spend less
Expansion or Boom
An expansion (or economic boom) is the opposite.
Businesses grow
More jobs are created
People feel confident spending and investing
Economies naturally move through cycles of ups and downs—it’s normal, but understanding it helps people prepare.
Capitalism (The System Behind It All)
In a capitalist economy, most businesses are privately owned, people can choose how to spend their money, and competition helps drive innovation.
Capitalism connects directly to:
Supply and demand
Producers and consumers
Investing and entrepreneurship
Understanding capitalism helps kids and teens see how businesses are built, how wealth is created, and how financial systems work.
How KidVestors Teaches Economics (The Fun Way)
At KidVestors, economics isn’t just a textbook topic—it’s something students experience.
KidVestors teaches economics by connecting it to:
Financial literacy (budgeting, saving, spending)
Investing (stocks, real estate, long-term growth, compound interest)
Entrepreneurship (starting businesses, pricing, profit)
Real-world decision making
Students learn concepts like supply and demand, opportunity cost, and inflation by doing, not memorizing. They even earn cash and stock rewards while learning—because understanding economics is even better when it pays off.
By combining economics with real money skills, KidVestors helps students understand how the world works and how to win in it.
One More Thing...
Economics isn’t just for adults or experts, it’s for everyone. It explains the choices we make, the prices we pay, and the opportunities we have.
When kids and teens understand economics early, they grow into confident decision-makers who know how to save, invest, build, and create. And that’s a skill that lasts a lifetime.
Ready to see what KidVestors can do?
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