Using the Class Store to Teach Economic Principles
- Grades: 3–5
- Unit Plan:
- Reflect on the importance of saving money
- Discover that every decision has an opportunity cost
- Observe consumer behavior to understand the law of demand
- Realize that advertising increases demand
- Discover how inflation works and the effect it can have on the classroom economy
- Copies of the Spending vs. Saving (PDF) worksheet for each student
- Copies of What Is My Opportunity Cost? (PDF) worksheet for each student
- Examples of advertisements directed at kids (for optional activity in Part 4)
- Poster board and markers (for optional activity in Part 4)
- Internet access (for optional activity in Part 5)
Set Up and Prepare
The following activities are to be completed on separate days and do not necessarily have to be done in the specified order.
Part 1: Spending vs. Saving
- Read aloud a book from the Books and Materials for Teaching Economic Concepts Book List, which teaches students about saving. Follow it up with a sharing session where students reveal a time when they have saved their own money to buy something. (This should be done on a day before students shop at the class store.)
- Tell students they will be planning how they will spend their money before shopping at the class store. Explain that there are three things consumers do with their money: spend, save, or share.
- Pass out the Spending vs. Saving (PDF) worksheet to each student. Explain to students that they will be completing this worksheet before they shop for the next five weeks. When completing the worksheet, students are asked to determine their short-term spending goals and their long-term saving goals.
- Ask students to share their spending vs. saving plans in small groups or as a class.
- Make a T-chart with spending on one side and saving on the other. Have students list pros and cons for both spending and saving.
- After students have completed the Spending vs. Saving worksheet for five consecutive weeks, have them analyze their shopping habits. Have students ask themselves the following questions:
–What do I do more often, save or spend?
–Have my saving and/or spending habits changed over the past five weeks?
–Has keeping track of my spending and/or saving caused me to make better decisions when shopping?
Part 2: Opportunity Cost
When students purchase an item, they give up the opportunity to save or purchase something else. There is an opportunity cost to every purchasing decision.
- Ask students to share a time when they wanted two things at the class store but only had enough money to buy one. Allow students to share their experiences with the class.
- Explain to students that opportunity cost is what is given up when students decide to buy something else at the store.
- Pass out the What Is My Opportunity Cost? (PDF) worksheet to every student in the class. After students shop at the store, have them fill out the worksheet to reflect upon what they gave up.
- OPTIONAL EXTENSION: Read aloud a recommended book from the Books and Materials for Teaching Economic Concepts Book List to provide students with another example of opportunity cost.
Part 3: The Law of Demand
Consumers buy more at low prices than at higher prices.
- Observe consumer behavior at the class store and make a list of items that students are not buying. Look for items that students have collectively deemed undesirable and have not chosen to purchase during multiple shopping opportunities.
- Significantly reduce the price of the less desirable items and announce to students before the store opens that these items are now "on sale." (If the price gets low enough and attention is drawn to the sale items, students will very likely buy these items today.)
- Hold a class meeting to discuss the sale items. Ask students the following questions:
–How many of you purchased items that went on sale today?
–Why didn't you purchase these items last week?
–Did the lower price make the items more desirable?
- Explain to students that this is the law of demand. Consumers buy more at lower prices than at higher prices.
- OPTIONAL EXTENSION: Read aloud Homer Price (The Doughnuts) to further illustrate the law of demand. (See Book List.)
Part 4: How Advertising Affects Demand
- Choose an item in your class store that is not in high demand. (Be sure it is an item available in multiple quantities like pencils, candy, stickers, etc.)
- Advertise the item to the class on a day that they will be shopping. (You may create a special poster to place by this item in the store, or you might just talk up the item as you would a good book. Be sure to convince students that the item is worth buying!)
- Keep track of how many students chose to buy the item at the class store after it was advertised.
- Hold a class meeting and report the total number of students who chose to buy the advertised item. Be sure to emphasize the increase in sales that occurred for that item after it was advertised.
- Ask students the following questions:
–How many of you purchased the item that was advertised?
–What made you choose to buy that item today?
–Did the teacher's advertisement persuade you to buy the item?
–Have you ever purchased something (or asked for something as a gift) after seeing it advertised on a commercial or in a magazine?
–What are some other ways that businesses advertise their products?
–Did the advertisement do anything to improve the product's quality or usefulness?
- Explain to students that advertising often increases demand.
- OPTIONAL EXTENSION:
–Bring to school examples of advertisements directed at children (from newspapers, magazines, flyers, etc.). If possible, you may even try to tape a five minute segment of Saturday morning television commercials.
–After studying the materials and watching the commercials, brainstorm things that advertisers do to make their products desirable to the consumers. Ask: Which ads were most effective? What made those ads effective?
–Have students work in small groups to choose an item at the store that they would like to advertise. Have students create posters or commercials to promote their chosen products.
–Assess their ads based on the student-created list of things that they believe make advertisements most effective. Have students monitor the items that they advertised to determine if their advertising persuaded consumers to buy the product. Did their advertising lead to an increase in demand?
Part 5: Inflation
As more money is made by students in the classroom economy, the price of goods will rise as well.
- Announce to your students that you have decided to double the originally agreed-upon salaries for each classroom job starting at the beginning of the next pay period. (You will not want to do this lesson until your classroom economy is well established and students have been doing the classroom jobs at the original salary for three to four months.)
- Hold a classroom discussion following the first shopping day after you double the salaries. Students are likely to be in high spirits. They will consider themselves "rich" and will love that they can now buy twice as much at the class store.
- Before the next time students shop at the store, raise the prices of the store items to reflect the increased amount of money students are making each week due to their doubled salaries. Students will likely be outraged that the prices of things at the store have doubled.
- Hold a class discussion and allow students to explain how they felt when they realized prices at the store had doubled. Use this time to explain to students the concept of inflation. Remind students that an increase in money is not necessarily an increase in wealth.
- OPTIONAL EXTENSION: Have students use an online inflation calculator to discover how the price of everyday items has increased over time due to inflation.
Supporting All Learners
Most of these lessons are followed up with a class discussion. Be sure to include all students in the discussion so that second-language learners and all others understand the economic concepts you are teaching.
Encourage students to begin paying more attention to the economic concepts they have learned in class when they are outside of school. After you teach each new concept in class, send a note home to parents explaining the concept and asking parents to reinforce the concepts when shopping with their kids.
- Students should complete the Spending vs. Saving (PDF) worksheet for five consecutive weeks.
- Students should complete the What Is My Opportunity Cost? (PDF) worksheet.
- Is your class store helping the students to learn important economic principles?
- Are your students beginning to pay closer attention to their own consumer behaviors?
- Which parts of the lesson worked well?
- Which parts of the lesson may require additional instruction?
- Are your students continuing to use the economic terms they have learned, even after the lessons are over?