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Economics for Kids — Book 2

by Ryan Semerau

Ages 7–12EconomicsPersonal Finance

The second book in the Economics for Kids series. Explores how people interact through trade, contracts, trust, risk, and cooperation — all in plain language with real-world examples kids can relate to. Covers ownership, insurance, incentives, competition, externalities, and more.

16 chapters · 76 lessons · first 6 free

IntroductionFree

1 · Ownership, Exchange, and Promises

1.1 · OwnershipFree
1.2 · Why Ownership MattersFree
1.3 · Unclear OwnershipFree
1.4 · Sharing and PromisesFree
Chapter 1 TestFree

2 · Trade and Agreements

2.1 · Trade BasicsFree
2.2 · Fair Trades🔒
2.3 · Agreements🔒
2.4 · Agreements and Planning🔒
Chapter 2 Test🔒

3 · Contracts

3.1 · Contracts🔒
3.2 · Terms and Conditions🔒
3.3 · Broken Contracts🔒
3.4 · Kid-Proof Contracts🔒
Chapter 3 Test🔒

4 · Trust and Information

4.1 · Why Trust Matters🔒
4.2 · Information for Trade🔒
4.3 · Missing Information🔒
4.4 · Imperfect Information🔒
Chapter 4 Test🔒

5 · Uncertainty

5.1 · Surprises🔒
5.2 · Planning Under Uncertainty🔒
5.3 · Choices Under Uncertainty🔒
5.4 · Flexibility🔒
Chapter 5 Test🔒

6 · Risk

6.1 · What Risk Is🔒
6.2 · Risk vs. Luck🔒
6.3 · Safe vs. Risky🔒
6.4 · Managing Risk🔒
Chapter 6 Test🔒

7 · Insurance

7.1 · Sharing Risk🔒
7.2 · Why Buy Insurance🔒
7.3 · How Insurance Works🔒
7.4 · What Insurance Covers🔒
Chapter 7 Test🔒

8 · Moral Hazard

8.1 · Protection Changes Choices🔒
8.2 · Moral Hazard Examples🔒
8.3 · Insurance and Behavior🔒
8.4 · Good Protection Design🔒
Chapter 8 Test🔒

9 · Adverse Selection

9.1 · Private Information🔒
9.2 · Who Buys Protection🔒
9.3 · Group Effects🔒
9.4 · Balancing the Pool🔒
Chapter 9 Test🔒

10 · Marginal Cost

10.1 · Kinds of Costs🔒
10.2 · One More Cost🔒
10.3 · Rising Costs🔒
10.4 · Next-Step Decisions🔒
Chapter 10 Test🔒

11 · Marginal Benefit

11.1 · Kinds of Benefits🔒
11.2 · One More Benefit🔒
11.3 · When to Stop🔒
11.4 · Costs and Benefits🔒
Chapter 11 Test🔒

12 · Sunk Costs

12.1 · Sunk Costs🔒
12.2 · The Trap🔒
12.3 · Better Questions🔒
12.4 · Quitting🔒
Chapter 12 Test🔒

13 · Incentives

13.1 · Incentives🔒
13.2 · Behavior🔒
13.3 · Bad Incentives🔒
13.4 · Using Incentives🔒
Chapter 13 Test🔒

14 · Competition and Monopoly

14.1 · Competition🔒
14.2 · Barriers to Entry🔒
14.3 · Monopoly🔒
14.4 · Few Sellers🔒
Chapter 14 Test🔒

15 · Externalities and Public Goods

15.1 · Spillovers🔒
15.2 · Externalities🔒
15.3 · The Commons🔒
15.4 · Public Goods🔒
Chapter 15 Test🔒

What you'll learn

✓What ownership means and why property rights matter
✓How trade, agreements, and contracts help people cooperate
✓Why trust and information are essential for deals to work
✓What uncertainty and risk are, and how insurance helps manage them
✓Moral hazard and adverse selection — hidden problems in agreements
✓How marginal cost, marginal benefit, and sunk costs shape decisions
✓What incentives are and why they drive behavior
✓How competition and monopoly affect prices and choices
✓What externalities and public goods are and why they matter

How to use this workbook

15 chapters, designed for one chapter per week (4 short lessons per week plus a chapter test). Each lesson takes about 15–20 minutes — read the lesson, talk it over with the AI tutor, then answer a few short questions in your own words. Your work is graded by the tutor and you can retake a chapter as many times as you need.

Prerequisites

Completion of Economics for Kids Book 1, or a basic understanding of scarcity, supply and demand, money, and trade.