How the Economy Works · seed 1 · A4, ink-friendly. The answer key prints on its own page for grown-ups.

How the Economy Works

Life Skills · Money & Finance · ages 9-11
Name ______________________   Date ____________

  1. A toy shop has 5 scooters in stock. On Saturday, 12 kids each want to buy a scooter. How many more scooters would the shop need so every kid who wants one could get one?

    Answer: ______________

  2. It is a super hot day and the ice cream truck has only 20 cones left. A long line of kids wants to buy one. What will most likely happen to the price of the cones?

    • The price will probably go up, because lots of people want cones and only a few are left
    • The price will drop to zero
    • The price never changes no matter what
    • The price will go down because it is hot

  3. Which person is a producer?

    • A farmer growing corn to sell
    • A shopper buying corn at the store
    • A truck driver stuck in traffic

  4. On a hot day, more people usually want to buy ice cream than on a cold day.

    Circle one:   True   False

  5. A bakery has only 3 loaves of bread left, but 10 people want to buy one. What will probably happen?

    • The price will definitely go down
    • The price may go up because there isn't enough bread for everyone
    • Nothing will happen to the price

  6. At the farmers market, sellers bring exactly 8 pies and buyers want exactly 8 pies at $5 each. Nothing is left over and nobody goes without. What is special about this price?

    • It is the price where supply and demand match, so the market is balanced
    • It is a random price with no meaning
    • It proves pies should always cost $5
    • It means there will be a surplus tomorrow

  7. A farmer brings 10 baskets of berries to the market and sells them for $4 each. By noon every basket is sold, and more people are still asking to buy. At $4, does the market have a shortage or a surplus of berries?

    • A shortage, because buyers want more berries than the farmer brought
    • A surplus, because the farmer sold everything
    • A shortage, because $4 is too cheap
    • A surplus, because berries grow on bushes

  8. An ice cream stand keeps selling out on hot afternoons, and people keep asking for more. What is likely to happen to the price?

    • It will probably go down
    • It will stay exactly the same
    • It will probably go up

  9. Jay says: 'Farmers are consumers because they use tractors to grow food.' What is wrong with Jay's statement?

    • Jay is right, since using a machine makes someone a consumer
    • Farmers are neither producers nor consumers
    • Farmers are producers because they grow food to sell, not because of the tools they use

  10. A shop has warm winter coats for sale. In summer, almost nobody wants to buy them. What most likely happens to the price of the coats?

    • The price may drop because demand is low
    • The price always goes up in summer
    • The price never changes with the seasons
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Answer key

For grown-ups. Fold this page away before handing over the rest.

How the Economy Works W1-mt_udgPy5oAvR-s1

  1. 7 · The gap between 12 kids who want scooters and 5 scooters in stock is 7. When stock runs far short of demand, shops usually order more and may raise the price.
  2. The price will probably go up, because lots of people want cones and only a few are left · When many people want something and there is only a little of it, sellers can ask for more money. That is supply and demand at work.
  3. A farmer growing corn to sell · A producer makes or grows things to sell, like the farmer growing corn.
  4. True · Hot weather makes people want a cold treat, so more people want ice cream, which means higher demand.
  5. The price may go up because there isn't enough bread for everyone · Limited supply combined with high demand often pushes prices higher.
  6. It is the price where supply and demand match, so the market is balanced · When the amount sellers supply exactly equals the amount buyers demand, the market is in balance. Economists call this the equilibrium price.
  7. A shortage, because buyers want more berries than the farmer brought · Selling out while people still want to buy means demand was bigger than supply. That is called a shortage.
  8. It will probably go up · When lots of people want something and there isn't enough of it, sellers often raise the price.
  9. Farmers are producers because they grow food to sell, not because of the tools they use · Using a tool to make something doesn't make someone a consumer of it. Farmers are producers because they grow food that others buy.
  10. The price may drop because demand is low · When fewer people want something, sellers often lower the price to attract buyers.
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