In this 5-part guide, I’m providing help for parents who want their children to understand economics better, but don’t know where to start. Prior posts include: Part 1: Scarcity and Stewardship and Part 2 – Production.
Part 3: Money, Markets, and Trade
Market function is the heart of economics. We would like to understand what the role of money is, and how prices come to be. Countries that make it easier to trade tend to be far more prosperous than those that make market activity difficult.
Key Concepts You’ll Be Explaining
Trade occurs where people value the same goods differently.
Suppose I have a violin, which I don’t know how to play. You are a violin prodigy who accidentally destroyed your only violin while backing out of the driveway. Suppose you also have an iPad given to you as a gift. It’s an extra for which you don’t have much use. I value the iPad more than the violin, and you value the violin more than the iPad. We might be able to arrange a trade which would leave both of us better off.