Fancy Nancy and the Delectable Cupcakes, by Jane O’Connor is a great book to use to introduce the economics of cupcakes. Not only are you able to discuss the productive resources necessary to make cupcakes (natural, human, capital) but the story also involves a school bake sale to raise money for the library. Below I have provided a think-aloud/read-aloud of the economics concepts in the book.

Before Reading: Discuss the ingredients necessary to make cupcakes. What goods would you need to buy in order to make cupcakes? When goods like a bag of flour or sugar are used to make cupcakes, these are known as intermediate goods. Discuss the concept of a bake sale. Have you been to a bake sale? Who provides the goods to sell–the baked goods? Who provides the services–the selling and packaging? How does a bake sale produce money for the school library? Do the workers or producers get paid for their services?

During Reading: During reading, there are spaces in the book that are perfect opportunities for discussing these concepts.

Cover: Fancy Nancy is making cupcakes. What goods do you need to buy at the supermarket to make cupcakes? Look at the picture. What are some of the resources she is using?

P. 6: There is a bake sale at school the next day. The bake sale is to raise money for library books. How does that work? How does the school make money from the bake sale? (People donate goods and services)

P. 12: At the market, what are the goods Nancy’s mom buys? These goods will be used to make other goods–cupcakes–so they are called intermediate goods. What are the natural resources that were used to create these goods? (sugar cane, wheat, etc.)

P. 13-15: Capital resources are the tools used to make the cupcakes. What tools are used? Human resources are the people who help make the cupcakes. Who are the human resources and what jobs are they doing?

P. 19: Nancy is making a deal with a friend to exchange two brownies for two cupcakes. Does that make money for the school library? How does that exchange benefit both Nancy and her friend? Nancy will exchange some cupcakes for other goods. She will also sell cupcakes in exchange for currency-money.

P. 25: After Nancy’s disaster where the dog eats the cupcakes, her father also brought home some “stuff” or resources to make cupcakes. What goods did he have in his bag? Were these the same goods mom bought? Anything different? Do you remember what you call goods that are used to make another product? That’s right! Intermediate goods. They are in the middle of being goods themselves (flour, sugar, etc.) and being made into another product (a cupcake).

P. 27: Check out the baking. What jobs were people doing on pages 25-27 in order to make cupcakes? What equipment (capital resources) or tools did they use? Was there anything different from the tools on pages 13-15?

P. 29-30: Finally! The bake sale. Who are the buyers? Who are the sellers? What are all of the goods for sale? How do you think people paid for the baked goods? Where do you think they stored the money?

After Reading: After you finish reading, review the economics concepts/ vocabulary words that you discussed in the read/aloud think/aloud questions and comments.

Welcome this summer series of snippets of ideas for Cupcake Economics.

For the first discussion, I’d like to focus on the book Hello Cupcake, by Karen Tack and Alan Richardson. Rather than fiction, I have chosen this non-fiction recipe book to begin. You can find many interesting cupcake ideas on the Hello Cupcake website.

Cupcakes are great to eat, Yum, but they are also great beginnings to use to talk about economics concepts. For example:

1. What are the productive resources needed to make cupcakes? Let’s start with ingredients. Pinky Pie (from My Little Pony) can help us with some of these in this delightful little video: Pinky-Pie’s Cupcake Song. Ingredients can be considered intermediate goods in creating the final cupcake good. What intermediate goods are mentioned in the song? What intermediate goods are mentioned in your favorite cupcake recipe?
2. Now think of those ingredients. What are the natural resources necessary to create those goods? For example, where does flour come from? How do we get sugar? Where do we get vanilla? Or chocolate? These are all questions that can lead to the natural resources.
3. Now think of the capital resources necessary to make those cupcakes. What tools and equipment do you use when baking. Pinky Pie can show you a few things–bowls, mixers, wooden spoons–but what other capital resources can you think of?
4. Now comes the human resources or human capital. What human resources are necessary to make cupcakes? This is different in your home than in a factory. For example, watch this series of Khan Academy Cupcake Economics videos to understand the complex economics of creating cupcakes in a factory:

• Economics of  a Cupcake Factory
• Cupcake Economics 2: More Analysis of the Cupcake Business
• Cupcake Economics 3 : Using our spreadsheet to show why prices decrease when utilization is low and prices

For this lesson, I used Pancakes, Pancakes by Eric Carle as a sample book.

I recommend you read the book aloud first to set a context for learning. Then, use the following questions/comments to develop a discussion about economic concepts–Econ-cepts. Visit the EconEdLink Glossary for definitions of the Econ-cepts.

Cover: If you wanted to eat a pancake at home, what would you you need (see wants)? (Before Reading)

Page 1-2: If you wanted pancakes for breakfast, are your choices? (use decision tree/chart–see the last post How Do You Hug a Porcupine for a sample Decision Tree.

Pages 3-4: What was Jack’s decision? What resources (tools, goods) does his mother need for pancakes? She needs flour-it is a scarce resource.  I wonder how Jack will decide to get flour. What would you do?

Page 5-6: What does Jack decide to do? If Jack has two choices–get flour or don’t get flour–what is his opportunity cost if he decides to get the flour? What is his opportunity cost if he decides not to get the flour? Remember opportunity cost is the next best alternative you give up when you make a choice between alternatives.

Page 5-10: Watch for the productive resources (human, capital, natural) used for flour. What are the tools, jobs, goods, and services?

Page 12:  What a lot of work! What is Jack’s incentive to keep going? He wants pancakes!

Pages 12-16: Let’s look at the division of labor. Who does what job with what tool? OR What are the human, capital, and natural resources?

Pages 17-18: Jack’s mom mentions a topping for pancakes. What decisions do you have to put on your pancakes? Let’s think of three items—maple syrup, butter, and jam. If I can’t decide between maple syrup and jam, but then choose the jam, then maple syrup is my next best choice. The next best choice is my opportunity cost of choosing the other alternative.

Page 19-28 On the next few pages, lets see what productive, human, and capital resources are needed to make pancakes? Note: for younger children you may want to ask what are the goods, services, jobs, and tools. Record these as students list them. Or they can record these and create a digital book with images and text. See the Technology Tips section of this website for more information on how to create digital responses.

For more ideas on using Pancakes Pancakes to teach Economics, view:

Lesson ideas focusing on productive resources: Kids Econ Posters

Lesson developed by the Maryland Council on Economic Education

How to Hug a Porcupine

I just received this “free” book with my box of Cheerios. How Do You Hug A Porcupine? by Laurie Isop was the winner of the Cheerios New Author Contest. This book provides a perfect text to examine Decision Making for young students. The story is about a little boy who has a porcupine as a friend. He tries to figure out how to hug the porcupine. After he hugs a variety of other animals, he decides to hug his friend the porcupine.

1) After you read the story, ask students if they would hug a porcupine who was their friend. Tell them that they have to make a decision whether or not to hug the porcupine. Show them a copy of a decision tree:
Decision Tree

2) Now work with the students to have them fill in their own decision tree based on the story. See the example below.

3) Having young students understand how to make decisions in everyday life is a first step toward introducing decision making. Watch this video by Paul Heyne for more information on storytelling as a way to enhance economic thinking…

For those lucky teachers who have access to SMART boards, the St. Louis Federal Reserve has produced economics lessons based on children’s books. I have copy-pasted these ideas from the St. Louis Federal Reserve site. Below you will find two “yummy” books–one for K-2 and the other for 3-5.

Messy Bessey’s Holidays (Book written by Patricia and Fredrick McKissack / ISBN: 0-516-26476-1)

Grade Level: K-2 | Interactive Whiteboard (.notebook, 509 KB)

In the book, Messy Bessey’s Holidays, Bessey wants to make holiday cookies to give as presents to her friends. Econ-cepts Learned: the factors of production, natural resources, human resources and capital resources (capital goods); as well as the intermediate goods used to make cookies.

Saturday Sancocho (Book written by Leyla Torres / ISBN: 0-374-46451-0)

Grade Level: 3-5 | Interactive Whiteboard (.notebook, 14 KB)

This is a story about a family in Central/South America that barters to get the ingredients for chicken sancocho, a kind of stew. Econ-cepts include: voluntary trade, intermediate goods, barter, money, and resources.

Here are some other SMART board lessons about economics concepts!

The Working World and Jobs People Have

What is an Economy?

Goods, Services, Producers, Consumers

Buyers and Sellers

EconEdLink is an excellent resource for economic lesson plans based on children’s literature. For example, check out this lesson on the Costs and Benefits of the Three Little Pigs and use this online  Three Little Pigs story. The lesson is based on economic decision making. In the lesson, students discuss the costs and benefits of the decisions the pigs made about building their houses. You can bring this story into upper elementary and middle school grades and use the PACED model of economic decision-making to evaluate the costs and benefits of building the three houses. Then, watch this fractured fairy tale of the Three Little Pigs. Bring the pigs into the 21st century and discuss responsible credit and the perils of the housing crisis.

Three Little Pigs from Guy Galer on Vimeo.

Now use the  PACED model  to evaluate the credit decisions made by the three little pigs. For more information on the credit/housing crisis, refer to these free economics videos available on Academic Earth.

Lawn Boy by Gary Paulsen is about a 12-year old who takes a summer job mowing lawns because he is broke (scarcity of money). He makes a choice to mow some lawns with his grandpa’s old riding lawnmower. This book has so many possibilities for economic education! I will break it into sections.  This week, I’ll focus on the concept of resources necessary for a lawn-mowing job.

Before reading, introduce the topic of a student taking a summer job to mow lawns. Use the ReadWriteThink Webbing Tool to create a graphic organizer while students brainstorm all of the resources that would be necessary for this job. For example, he would need a lawn mower, as well as the gasoline and oil to run the machine. What else would he need? Think about his time–human capital. Think about other things he would need. Then, during reading, students can find more resources necessary for this entrepreneurial adventure. Finally, after reading, they can compare notes and rethink the initial web.

Check out Rutger’s EconKids Suggestions for more ideas on how to use this book for economics concepts.