Economics: economic systems, trade, and choices, Western Hemisphere (grade 6) · lesson

Kinds of economies

💡 The kind of economy depends on who makes the big choices: custom, the government, buyers and sellers, or a mix.

In a traditional economy, people make and share things the way their families always have. Custom decides.

In a command economy, the government decides what to make and what it costs. In a market economy, buyers and sellers decide.

Most countries, like the United States, have a mixed economy. Private businesses make most choices, but the government sets some rules and runs some services, like public schools.

🧠 Let's work it out

Ask one question: who decides?
A village that fishes the way great-grandparents did is following custom, so it is traditional.
A government that tells factories what to make is command.
Businesses plus some government rules is mixed.

What do you think comes next?

traditional economy: an economy run by custom
command economy: an economy where the government decides
market economy: an economy where buyers and sellers decide
mixed economy: a blend of market choices and government roles

Supply, demand, and prices

💡 When something is scarce and many people want it, its price goes up.

Supply is how much of something there is to sell. Demand is how much people want to buy it.

If supply drops and people still want the thing, buyers compete for it. The price goes up. If lots of people suddenly want something, the price goes up too.

If there is more than people want, sellers lower the price to sell it.

🧠 Let's work it out

A frost ruins much of the coffee crop.

Supply goes down.
Do people still want coffee? Yes.
So there is less coffee for the same number of buyers.
The price rises.
It does not drop to zero, because people still want it.

What do you think comes next?

supply: how much of a good there is to sell
demand: how much of a good people want to buy

Scarcity and opportunity cost

💡 Because we can't have everything, every choice gives something up.

Scarcity means there is not enough money, time, or stuff for everything people want. So people, towns, and countries must choose.

The opportunity cost of a choice is the next-best thing you gave up. It is not the thing you got.

🧠 Let's work it out

Lena spends $20 on a game instead of saving for a bike.

What did she get? The game.
What did she give up? Saving for the bike.
The thing given up is the opportunity cost.
A town that can fix roads or build a park, but not both, is facing scarcity.

What do you think comes next?

scarcity: not having enough to meet every want
opportunity cost: the next-best choice you give up

🔗 Khan Academy: Basic economic concepts · Khan Academy ↗

Trade between countries

💡 Countries trade so each can focus on what it does well, but leaning on one export is risky.

Colombia's warm weather is good for coffee. Canada has wide fields for wheat. If each grows what it is good at and they trade, both end up with more. This is specialization.

Goods a country sells to other countries are exports. Goods it buys from other countries are imports.

Some countries earn most of their money from one export, like oil. If the price of that one good falls, the whole country earns much less.

🧠 Let's work it out

Most of a country's export money comes from oil.

Oil prices fall by half.
Follow the money: the same oil now brings in about half as much.
Other goods don't jump in price to make up for it.

What do you think comes next?

export: a good sold to another country
import: a good bought from another country
specialization: focusing on what you make best and trading for the rest

Goods, services, and resources

💡 A good is a thing, a service is work done for someone, and resources are what we use to make them.

A good is something you can hold, like bananas or a bike. A service is work someone does for you, like a doctor checking your heart.

Natural resources come from nature, like oil, copper, and water. Human resources are people's work and skills. Capital resources are things people built to make other things, like factories and tools.

🧠 Let's work it out

Ask: can I hold it?
If yes, it's a good.
If it's an action, it's a service.
For resources, ask: did people make it, or was it found in nature?
Copper in a mountain was found.
A car factory was made.

What do you think comes next?

good: an object that is made and sold
service: work done for someone
natural resource: something useful found in nature
capital resource: a tool, machine, or building used to make goods