Supply and demand is one of the first economic principles that kids can learn. Even young kids can understand the basic relationship between supply, demand and prices. Through simulations and discussions as well as real-world observation, kids can understand this core economic idea.

Simulation Games

Creating a simulation of an economic system within a classroom is one of the best ways for kids to observe economic principles at work. An example is The Story of Supply and Demand. Give each student a coloring sheet that indicates what colors to use in each space, so students cannot choose to use different colors. All the students should have different coloring sheets. Give each student a certain amount of play money. Tell the students that all of the coloring sheets require red, but there is only one red marker available. In addition, only one sheet requires brown, but there are several brown markers available. Then auction off the markers. After each auction, give the students a few minutes to color, then hold another auction during which they can auction off the markers they have already used in order to obtain more markers. This activity will demonstrate the effects of too much supply and too much demand on price.


There are many simple stories you can use to illustrate the concept of supply and demand. An example is "Tuma and the Earthen Jars of Water," a story about a man selling water to nomads in the desert. Tuma finds more people who want water than he has jars to sell, illustrating an excess of demand. Tuma plans to sell the water for a high price, but instead the nomads steal his jars, illustrating violent responses to scarcity.

Discussion Activities

Once they understand the basic impact of supply and demand on price, kids can make predictions of how certain events would affect prices. One way to discuss this that kids will enjoy is by looking at economic chain reactions and their potential effect on prices. For example, ask kids how an increased demand for candles would affect the price of crayons. Since both are made of wax, the price of candles and crayons would both go up.

Real-world observations

Kids will enjoy applying the economic principles they've learned to real-world scenarios. One way to do this is by looking at historical examples when supply and demand changed price and asking kids to figure out why the price of something changed after a certain event. A simple example would be the price of flowers, which always goes up at the beginning of February and down at the end of February, because demand for flowers increases before Valentine's Day.