Economics Lesson for Kids: Definition & Terms

Instructor: Mary Beth Burns

Mary Beth has taught 1st, 4th and 5th grade and has a specialist degree in Educational Leadership. She is currently an assistant principal.

Economics is one of the most important fields in the world, as it is the understanding of economics that can help make a person, a company, or even a country a wealthy place. Come and learn what economics is as well as some basic terms.

What is Economics?

Do you like money? Right, silly question. Of course you like money. Well, then you also might like economics. Economics is not only the study of money, it is also the study of all things that have to do with money, like what causes people to buy things, how businesses can set themselves up to be profitable, and how people behave when it comes to money. Economists, people who study economics, also study things that have happened with the economy in the past, in order to make predictions for the future of the economy.

Some economists study the trends in the economy in order to develop theories. The first man to do this was Adam Smith, and he earned the nickname 'The Father of Economics.' He realized that when people make and sell things that other people want, this is not only good for the seller, but it is good for everyone. Therefore, private individuals, not the government, should control how goods are produced and how monies are distributed. This is known as capitalism.

Economic Terms

Economics can be a very complicated area of study, especially when you are just starting to learn about it. Whenever you are learning about a new topic, one of the best strategies is to learn as much of the vocabulary that you can. Here are a few terms will help you better understand economics:

Goods: Something that is produced such as televisions, cars, food and furniture.

Services: Actions that other people or companies perform, like a maid service, trash-pick up or a babysitter.

The barber is performing a service of trimming the man
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Need: Something that is necessary to live, like food or water

Want: Something that is desirable, but not needed to survive, like new clothes or a new toy

Producers: People who make the goods or supply the services that are for sale, like a farmer, a shoe store or a cable company.

Consumers: People who purchase the goods or services for sale. If you have ever spent money on a good or a service, you are a consumer.

Supply: The amount of goods or services. Supply is dependent upon many factors and changes frequently. For example, when the newest iPhone is released, the supply will be lower than several years after its release.

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